The Department of Labor adopted a final rule that could curb investing in 401(k)s based on environmental and social issues.
First proposed in June, the rule published Friday requires that funds in retirement plans only consider risk-and-return for stocks and bonds—and not environmental or social issues.
“This rule will ensure that retirement plan fiduciaries are focused on the financial interests of plan participants and beneficiaries, rather than on other, non-pecuniary goals or policy objectives,” said Labor Secretary Eugene Scalia.
Still, a senior department official said funds that consider environmental and social issues could be allowed if managers document how the strategy benefits the core risk-and-return objective.
“This does not mean that fiduciaries are prohibited from considering such issues as environmental impact and workplace practices,” the official said.