In November 2020, The Forum for Sustainable and Responsible Investment (US SIF) reported approximately $17.1 trillion (or 33%) of all U.S assets under professional management are considered sustainable investing assets, an increase of 42% since 2018. With the growth of ESG investing, regulatory bodies have sought to provide guidance on how ESG metrics should be considered by investors and professional money managers. In 2020, the Department of Labor (DOL) adopted a regulation intended to strictly limit fiduciaries use of ESG metrics in their investment decisions.

In this critique, NYU Stern alum Jamie Friedland (MBA '20) explores the DOL’s finalization of their regulation “walks back” and the most direct attacks on ESG metric considerations that contains fundamental flaws. The final regulation conflicts with other regulations make faulty assumptions on ESG materiality and costs (partly due to lack of basic due diligence) and disregards another regulatory agency’s historical jurisdiction. Friedland's findings suggest that under the new President Biden administration, the DOL will likely make fundamental changes to clarify how fiduciaries can use ESG metrics and still maintain their ERISA mandate of managing for the client’s best interests.

To read the full critique, click here.