Fiduciaries’ Selection of Pension Plan Investments
Guidance and Regulation of Pecuniary and Nonpecuniary Factors
The fiduciary standards in the Employee Retirement Income Security Act of 1974 (ERISA) require that individuals who make decisions for private sector pension plans (referred to as fiduciaries) adhere to specified standards of conduct. The standards include an obligation to act prudently and for the exclusive purpose of providing benefits to participants and beneficiaries. Over the years, investors — including pension plan sponsors and participants — have taken an interest in investment features beyond the standard risk and return relationship. Examples of such investments include those that consider the effects of climate change (e.g., preferring renewable energy companies to fossil…
