Just before year end, the Department of Labor finalized its new rules on ESG investing and voting for retirement and pension funds. The rules sharply restrict the ability of the fiduciaries of retirement and pension funds to make investments based on ESG factors, or to vote shares held by such funds in favor of ESG issues. The rules are unlikely to prove popular with the Biden administration, but regardless of how long they survive, the rules currently apply to trillions of dollars of investments, and raise interesting questions about who will ultimately control the placement of a huge amount of the public’s investment capital and the voting on ESG matters of shares held by fiduciaries.
On November 12, 2020, Institutional Shareholder Services (“ISS”) issued its proxy voting guidelines and policy updates for 2021. These guidelines apply for shareholder meetings taking place on or after February 1, 2021. The most noteworthy changes are described below. Companies included in the S&P 500 index should also note that ISS will no longer provide drafts of its reports for company review prior to publication.