Voya Financial Comments on DOL's ESG Retirement Plan Guidance Proposal
Voya Financial, Inc. (NYSE: VOYA), has submitted a comment letter to the Department of Labor (DOL) concerning the DOL's proposed amendments to the "investment duties" regulation under the Employee Retirement Income Security Act of 1974 (ERISA). The proposed rule would effectively eliminate the circumstances in which environmental, social and governance (ESG) factors that do not meet the DOL's definition of "pecuniary" may be used in the selection of ERISA investments. Voya has several concerns with the DOL's proposal and believes it ignores the needs of retirement plan savers and fails to recognize the benefits that ESG investments can provide.
If enacted, the DOL's proposal would likely make it more difficult for plan sponsors to consider ESG factors in their evaluation of plan investment options. This would not only be detrimental to the broader benefits of ESG investing but - contrary to the DOL's stated purpose of the proposal - would dissuade plan sponsors from considering all means by which they can fulfill their fiduciary obligations, and it could prevent plan participants from accessing investments that have the potential to outperform over the long term.
"At Voya, we believe that creating sound investment decisions is fundamental to helping Americans achieve their retirement investing goals, and we strongly support a system that allows the ability to choose from a wide variety of products and investment information to achieve this goal," said Christine Hurtsellers, CEO of Voya Investment Management. "We believe that fulfilling fiduciary obligations and ESG investing are not mutually exclusive. Contrary to the DOL's assertion, recent experience has shown that ESG investments can outperform broader markets, particularly in times of market stress. Ultimately, we believe that ESG factors may help identify material financial risks and opportunities and can drive better long-term investment performance. If adopted as proposed, we believe the proposal would have a chilling and negative impact on ESG investment activities that would otherwise benefit retirement plan savers."
Available research and data show: an increase in the array of available ESG-focused investment vehicles; a proliferation of ESG metrics, services and ratings offered by third-party service providers; and an increase in asset flows into ESG funds. According to Morningstar, the amount of assets invested in so-called sustainable funds in2019 was nearly four times larger than in 2018.1 Recent Voya research has also found that more than three-quarters (76%) of individuals felt it was important for their employer to apply ESG principles to workplace benefits, and more than half (60%) would likely contribute more to an ESG-aligned retirement plan if it was certified.2
"Providing the opportunity to employ ESG principles into benefit plans can allow businesses to treat their employees with the same quality standards as the customers they serve," added Charlie Nelson, CEO of Retirement and Employee Benefits at Voya Financial. "As more businesses embrace and incorporate ESG into their business practices, it seems inconsistent to not also do so inside benefit plans. We are hopeful that this will be more of the standard than unique."
In its comment letter, Voya notes that the DOL's proposal would place new and burdensome requirements on fiduciaries seeking to make ESG-focused investments available to plan participants or for even considering ESG factors in investment strategies that are not ESG-focused. Therefore, Voya respectfully urges the DOL to withdraw its proposal and either leave prior guidance in place, or develop a new proposal that recognizes and supports the important role that ESG factors can have in identifying appropriate investments and promoting participation in workplace retirement savings plans.
As an industry leader and advocate for greater retirement readiness, Voya Financial is committed to delivering on its vision to be America's Retirement Company® and its mission to make a secure financial future possible - one person, one family, one institution at a time.
1. "Sharpening the Tools of the ESG Investor," Morningstar (July 2020).
2. Voya "ESG Principles & Investing" study conducted through Voya's Online Consumer Community with n=101 consumers balanced by age and gender (June 2020).
About Voya Financial®
Voya Financial, Inc. (NYSE: VOYA), helps Americans plan, invest and protect their savings - to get ready to retire better. Serving the financial needs of approximately 13.8 million individual and institutional customers in the United States, Voya is a Fortune 500 company that had $7.5 billion in revenue in 2019. The company had $538 billion in total assets under management and administration as of March 31, 2020. With a clear mission to make a secure financial future possible - one person, one family, one institution at a time - Voya's vision is to be America's Retirement Company®. Certified as a "Great Place to Work" by the Great Place to Work® Institute, Voya is equally committed to conducting business in a way that is socially, environmentally, economically and ethically responsible. Voya has been recognized as a 2020 World's Most Admired Company by Fortune magazine; one of the 2020 World's Most Ethical Companies® by the Ethisphere Institute; as a member of the Bloomberg (News - Alert) Gender Equality Index; and as a "Best Place to Work for Disability Inclusion" on the Disability Equality Index by Disability:IN. For more information, visit voya.com. Follow Voya Financial on Facebook, LinkedIn and Twitter (News - Alert) @Voya.
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