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This fact brief was originally published as an experiment to test the concepts behind fact briefs.

Readers should be aware that while there is still a lot of useful information in fact briefs like this one, not all of them reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date, don't hesitate to contact us at support@gigafact.org.

FACT BRIEF

Is the Labor Department moving to limit 401(k) investments in 'socially responsible' assets?

Wednesday, August 12, 2020

By Samuel Henning

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YES

The Labor Department, which regulates retirement plans, is seeking to amend a rule governing 401(k) and similar plans, making it harder for their managers to invest in so-called ESG funds, which weigh environmental, social and governance considerations in investment decisions. The change would require fund managers to make decisions based on purely economic factors before considering any “non-pecuniary” aspects of a fund. "Retirement plans are not vehicles for furthering social goals," the Labor Secretary said.

Interest in ESG funds has grown along with public concern about climate change. Blackrock, the world's largest investment manager, says ESG funds can outperform other investments during market downturns. Younger investors in particular have responded to the opportunity to save for retirement in what they see as a more socially responsible way.

This fact brief is responsive to conversations such as this one.

Sources

Department of Labor: New investment rule

Bloomberg: Administration targets ESG Funds With 401(k) Rule

CBS News: Administration moves to squash 'socially responsible' investing

Blackrock: Sustainability resilience research

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Gigafact

Between 2020 and 2022, under close editorial supervision, Gigafact contracted a group of freelance writers and editors to test the concepts for fact briefs and provide inputs to our software development process. We call this effort Gigafact Foundry. Over the course of these two years, Gigafact Foundry writers published over 1500 fact briefs in response to claims they found online. Their important work forms the basis of Gigafact formats and editorial guidelines, and is available to the public on Gigafact.org. Readers should be aware that while there is still a lot of relevant information to be found, not all fact briefs produced by Gigafact Foundry reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date and need to be looked at with fresh eyes, don't hesitate to contact us at support@gigafact.org.

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About fact briefs published on Gigafact

Fact briefs are short, credibly sourced summaries that offer “yes/no” answers in response to claims found online. They rely on publicly available, often primary source data and documents. Fact briefs are created by contributors to Gigafact —a nonprofit project looking to expand participation in fact-checking and protect the democratic process. See all fact briefs here.