Don’t Fall for ESG Investments

Posted March 13, 2023

Background

In November, the U.S. Department of Labor announced a final rule that allows retirement plan fiduciaries to consider climate change and other environmental, social, and governance (ESG) factors when selecting retirement investments—all based on Executive Order 14030, signed by President Biden in May of 2021.

However, in late January, 25 states, two fossil fuel companies, and an oil and gas advocacy group filed a lawsuit against the Department of Labor and called for its rule to be overturned. The suit seeks to gain a preliminary injunction against the rule, which was slated to take effect on January 30.

Implications

While ESG investments have gained popularity in recent years, they lack standardization, come with higher costs, and lead to a lower return on investment. There are limited options available, unverified claims to attract ESG-conscious investors, and obvious conflicts of interest not aligned with an individual investor’s goals.

What this means for you

We won’t be recommending ESG funds for your plan(s). We just want you to know your options and what is available to you.

If you have any questions, please call us and we’ll gladly take a look at your plan(s) to be sure your investments have not been impacted by the rule.

Shawn Harrison

As partner in CoSource Financial Group, LLC, Shawn’s main role is business development of 401(k) plans throughout the Gulf Coast. Many of his clients are specialists in the oilfield, car dealerships and sugar industries. Shawn has been a leader in the corporate retirement plans for more than 20 years. Shawn assists the plan sponsor as fiduciary to their company’s retirement plan to navigate their responsibilities to ensure optimal investments, reasonable fees and informed participants. He and his team create a best practices retirement plan that helps protect the plan sponsor from liability and loss, while promoting positive participant outcomes. Our motto is “boots on the ground,” so you will not catch Shawn in the office often, but will find him on the road meeting with his clients and participants at their offices. He lives with his wife, Julie, and children, Katherine, Molly Sue and Shawn Patrick, in Thibodaux, where they enjoy the outdoors of Louisiana.