Recommendations
The United States roadmap makes recommendations in seven categories:
1. Investor Education: Trustee boards should ensure capacity and competence on ESG issues. This should be industry-led.
2. Corporate Reporting:
a. The Securities and Exchange Commission (SEC) should update Regulation S-K to ensure high quality disclosure of ESG factors.
b. NASDAQ and NYSE should provide ESG reporting guidance for issuers.
3. Investment Consultants: Industry stakeholders should build on existing guidance to plan fiduciaries and trustees on the integration of ESG factors into investment consultant services.
4. Legal Advice: Lawyers should ensure their institutional investor clients understand the legal risk arising from a lack of prudent management of ESG factors.
5. Stewardship and Engagement:
a. The Department of Labor should withdraw the Shareholder Right's Bulletin.
b. The SEC should provide updated guidance on collaborative engagement between shareholders.
c. The SEC should introduce universal proxy ballots.
6. Organisational Process and Disclosure:
a. Institutional investors should work with advisors and consultants to produce best-in-class investment policy statements.
b. The Department of Labor should request disclosure of the extent to which pension plans incorporate long-term value drivers into investment decisions and relationships with service providers.
7. ERISA and Plan Governance: The Department of Labor should conduct an industry study of the governance structures of corporate pension plans.
1. Investor Education: Trustee boards should ensure capacity and competence on ESG issues. This should be industry-led.
2. Corporate Reporting:
a. The Securities and Exchange Commission (SEC) should update Regulation S-K to ensure high quality disclosure of ESG factors.
b. NASDAQ and NYSE should provide ESG reporting guidance for issuers.
3. Investment Consultants: Industry stakeholders should build on existing guidance to plan fiduciaries and trustees on the integration of ESG factors into investment consultant services.
4. Legal Advice: Lawyers should ensure their institutional investor clients understand the legal risk arising from a lack of prudent management of ESG factors.
5. Stewardship and Engagement:
a. The Department of Labor should withdraw the Shareholder Right's Bulletin.
b. The SEC should provide updated guidance on collaborative engagement between shareholders.
c. The SEC should introduce universal proxy ballots.
6. Organisational Process and Disclosure:
a. Institutional investors should work with advisors and consultants to produce best-in-class investment policy statements.
b. The Department of Labor should request disclosure of the extent to which pension plans incorporate long-term value drivers into investment decisions and relationships with service providers.
7. ERISA and Plan Governance: The Department of Labor should conduct an industry study of the governance structures of corporate pension plans.
Implementation
The project team is engaging on the following priorities for 2018 and beyond:
- The House and Senate should not pass the Financial CHOICE Act.
- The Department of Labor (DOL) should publish analysis of ERISA-governed plans’ governance structures on ESG issues in comparison to international and public US peers.
Related Reports
Untangling Stakeholders for Broader Impact: ERISA Plans and ESG Incorporation (September 2018)
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Ohio Roadmap (June 2018)
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Financial Performance of ESG Integration in US Investing
(Feb 2018) |
Working towards a sustainable financial system: investment consultant services review (Dec 2017)
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Addressing ESG factors under ERISA (2016)
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