Voya Financial, Inc. (NYSE: VOYA), is pleased to recognize the Department of Labor’s (DOL) final rulemaking on “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights.”
The final regulation builds on the original proposal from the DOL issued in October 2021, which many in the industry, including Voya, supported. Specifically, Voya’s support centered around the DOL’s decision to craft “investment duties” regulations that provide clarity to plans, plan sponsors, investment fiduciaries and participants.
Today, the final rule ultimately recognizes the important role that environmental, social and governance (ESG) factors can play in the evaluation and management of retirement plan investments, while continuing to uphold fundamental fiduciary obligations. The final rule also recognizes that allowing plan fiduciaries to consider the preferences of participants within the overall context of discharging their fiduciary duty. This may open the door to increased participation by younger workers who have been shown to favor investments that consider ESG options, which supports recent data from Voya finding nearly three-quarters (72%) of working millennials agree or strongly agree that they would be interested in access to retirement plan investment options focused on a positive impact on ESG issues.1
“We are fully supportive of the DOL’s final rulemaking permitting consideration of ESG factors in investment decisions within retirement plans,” said Heather Lavallee, CEO, Wealth Solutions, and president and CEO-elect, Voya Financial. “With the right guidance and fiduciary evaluation, we believe the integration of material ESG considerations can play an integral role when it comes to the long-term investment portfolio of retirement savers today. As a result, the final rule by the DOL provides a step in the right direction in ultimately supporting our customers and their workforces with their retirement savings and investing goals.”
The final rule comes at a time when many employers are adapting to the growing importance of ESG factors within their business and retirement plan practices as well. According to new Voya research of retirement plan decision-makers within higher education institutions, more than half (51%) find ensuring their retirement plan is consistent with ESG principles to be a very important focus when it comes to organizational priorities during the next two years.2 And the focus for support in this area continues to grow as the research also found 40% of institutions find adopting strong socially responsible business practices and policies across ESG areas to be much more important today compared to before the COVID-19 pandemic.3 As attracting and retaining top talent remains an important priority for all companies today, the support from the DOL provides a greater opportunity for employers to place a heightened focus on ESG considerations when it comes to both their business practices and their retirement plan offerings.
“As many companies today remain focused on attracting and retaining talent to their organizations, the employer-sponsored retirement plan is becoming an increasingly popular tool for individuals when seeking an employer,” added Charlie Nelson, vice chair and chief growth officer at Voya Financial. “In fact, our own research has found that, while 60% of working Americans are more likely to stay with an employer who offers an employer-sponsored retirement plan, nearly half (45%) are also more likely to stay with one who offers diversity, equity and inclusion practices.4 As this interest continues, we’re encouraged by the DOL’s decision and final rulemaking on ESG investing within retirement plans, as this will only help to provide more opportunity for individuals to achieve a secure financial future.”
The final rule clarifies how the Employee Retirement Income Security Act’s (ERISA) fiduciary duties of prudence and loyalty apply to selecting investments and investment courses of action along with exercising shareholder rights such as proxy voting. In addition, the rule retains the core principle that the duties of prudence and loyalty require ERISA plan fiduciaries to focus on relevant risk-return factors that are within the interests of participants and their beneficiaries. Lastly, the rule further clarifies that a fiduciary's duty of prudence must be based on factors that the fiduciary reasonably determines are relevant to a risk-and-return analysis and that such factors may include the economic effects of climate change and other ESG considerations on the investment or investment course of action, provided that a fiduciary may not subordinate the interests of participants and beneficiaries to other objectives, and may not sacrifice investment return nor take on additional investment risk to promote goals unrelated to such interests.
As an industry leader focused on the delivery of workplace benefits, savings, and investment solutions to and through the workplace, Voya Financial is committed to delivering on its mission to make a secure financial future possible for all Americans — one person, one family, one institution at a time.
1. Voya Financial survey conducted June 3-4, 2021, on the Ipsos eNation omnibus online platform among 1,000 adults (191 working Millennials) aged 18+ in the U.S.
2. & 3. Findings based on the results of a Voya Financial survey conducted by Greenwald Research among 301 higher education plan sponsor retirement plan decision-makers from June 29-July 19, 2022.
4. Voya Financial survey conducted Oct. 10-11, 2022, on the Ipsos eNation omnibus online platform among 1,004 adults aged 18+ in the U.S.
Environmental, social and governance (“ESG”) factors can impact the investment risk and return profiles of our investments. Investing based on ESG factors may cause a strategy to take risks or forego exposures available to strategies or products that do not incorporate ESG factors, which could negatively impact performance. There is no assurance that investing based on ESG factors will be successful. Past performance is no guarantee of future results.
About Voya Financial®
Voya Financial, Inc. (NYSE: VOYA) is a leading health, wealth and investment company that provides products, solutions and technologies that enable a better financial future for its clients, customers and society. Serving the needs of 14.3 million individual, workplace and institutional clients, Voya has approximately 6,000 employees and had $711 billion in total assets under management and administration as of Sept. 30, 2022. Certified as a “Great Place to Work” by the Great Place to Work® Institute, Voya is purpose-driven and equally committed to conducting business in a way that is socially, environmentally, economically and ethically responsible. Voya has earned recognition as: one of the World’s Most Ethical Companies® by the Ethisphere Institute; a member of the Bloomberg Gender-Equality Index; and a “Best Place to Work for Disability Inclusion” on the Disability Equality Index. For more information, visit voya.com. Follow Voya Financial on Facebook, LinkedIn and Twitter @Voya.