PLANSPONSOR - January - February 2024 - 29

The Informed Investor
STANDARDS and regulations for reporting
environmental, social and governance
metrics remain in flux, as the Securities
and Exchange Commission is yet to
announce its final rule on climate disclosures,
which would require public companies
to release information about climaterelated
risks likely to affect their business.
Julie Santoro, an audit partner in
KPMG US's department of professional
practice, speaking in the session " The
Informed ESG Investor, " said investors are
primarily waiting for the rule to be final.
Among
areas proving
particularly
difficult for the SEC are financial statement
disclosures involving scope 3 emissions,
or emissions attributable to a company's
supply chain; these would require
public companies to obtain data from
private-nonregulated-firms.
The SEC did finalize its ESG fundnaming
rule, expanding the types of names
that could be considered misleading if a
fund has no policy to invest at least 80% of
the value of its assets as its name suggests.
Greenwashing, where a fund manager
misrepresents a fund it sells as sustainable,
has been a problem, experts said. To avoid
accusations of greenwashing, a fund needs
a lower exposure to energy, water and
waste intensities relative to the benchmark,
explained Roberto Lampl, ESG sector head,
financials and real estate, at ISS ESG (ISS
is owner of PLANSPONSOR).
Marcia Wagner, founder of The
Wagner Law Group, said the uncertainty
may have a " chilling effect " on sponsors
worried about class action lawsuits and
noncompliance. To satisfy both fiduciaries
and participants who ask for ESG options,
some plan sponsors are considering selfdirected
brokerage windows, Wagner said.
To assess ESG funds for the investment
menu, she said, a standard protocol
includes an investment policy statement
written by a lawyer, determination of what
guidelines should be followed and " some
type of benchmarking. " Still, she said,
lawsuits are expected. -Remy Samuels
Forward Thinking
THE NEED FOR environmental, social and
governance
disclosures
for
companies
lurks just around the bend, either directly
or via business they conduct in other
regions, said speakers in the " Forward
Thinking " session.
Corporate sustainability regulations
coming to Europe this year will be relevant
both for its domestic companies and
businesses operating there, meaning a
number of large U.S. companies, said
Mirtha Kastrapeli, executive director of
ESG corporate ratings in the ISS ESG
practice.
Allison Itami, a principal in Groom
Law Group, Chartered, said U.S. companies
may already be anticipating such
ESG disclosures. In California in particular,
the Climate Accountability Package,
which exceeds Securities and Exchange
Commission disclosure rules, will as
of 2025 mandate corporate climate and
climate-related risk disclosures.
Kastrapeli noted that disclosure
methodologies created by the International
Sustainability Standards Board, as well as
Navigating ESG speakers
Rachel Alembakis,
managing editor of
FS Sustainability, an
ISS Media brand
Witold Henisz, vice dean
and faculty director, ESG
Initiative, The Wharton
School of the University of
Pennsylvania
Allison Itami,
principal, Groom Law
Group, Chartered
Mirtha Kastrapeli,
executive director,
ESG Corporate
Ratings, ISS ESG
Roberto Lampl, ESG
sector head, financials
and real estate, ISS
ESG
Julie Santoro, audit
partner, KPMG
US, department of
professional practice
Bonnie Treichel,
founder and chief
solutions officer,
Endeavor Retirement
Marcia Wagner,
founder, The Wagner
Law Group
the European Sustainability Reporting
Standards in Europe, provide clarity on
how to consider and report on ESG factors.
There are some differences between
the European and ISSB approaches to
ESG disclosures, Kastrapeli
said. The
EU is focused on a " double-materiality "
approach in terms of both " how the world
affects a company and how the company
affects the world. " Meanwhile, the ISSB
concentrates more on how the financial
materiality affects the company itself in
terms of long-term impact. She recommended
that U.S. investors start with the
ISSB standards when approaching ESG
disclosure standards.
When it comes ESG investing in qualified
retirement plans, Itami referred to
the long-standing " all things being equal "
test. When used under the Employee
Retirement Income Security Act, the test
provides the baseline that, if an investment
is equal in all pecuniary factors,
then it may be considered a " collateral "
benefit for inclusion. " I don't expect that
test to change, going forward, " she said.
-Alex Ortolani
PLANSPONSOR.COM January - February 2024 29
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PLANSPONSOR - January - February 2024

Table of Contents for the Digital Edition of PLANSPONSOR - January - February 2024

INSIGHTS
PARTICIPANT ANALYSIS
RULES & REGULATIONS
UPFRONT
What’s Around the Corner?
A Focus on Guaranteed Income
Navigating ESG
Are You on Track?
Demographic Shifts
Advice on Advice
Fiduciary Best Practices
2 Distinct Roles for When Sponsors Act
The DOL’s Not-So-New Fiduciary Rule
Continuous Good Service
PLANSPONSOR - January - February 2024 - Cover1
PLANSPONSOR - January - February 2024 - INSIGHTS
PLANSPONSOR - January - February 2024 - 1
PLANSPONSOR - January - February 2024 - 2
PLANSPONSOR - January - February 2024 - 3
PLANSPONSOR - January - February 2024 - PARTICIPANT ANALYSIS
PLANSPONSOR - January - February 2024 - 5
PLANSPONSOR - January - February 2024 - RULES & REGULATIONS
PLANSPONSOR - January - February 2024 - 7
PLANSPONSOR - January - February 2024 - 8
PLANSPONSOR - January - February 2024 - 9
PLANSPONSOR - January - February 2024 - UPFRONT
PLANSPONSOR - January - February 2024 - 11
PLANSPONSOR - January - February 2024 - 12
PLANSPONSOR - January - February 2024 - 13
PLANSPONSOR - January - February 2024 - 14
PLANSPONSOR - January - February 2024 - 15
PLANSPONSOR - January - February 2024 - What’s Around the Corner?
PLANSPONSOR - January - February 2024 - 17
PLANSPONSOR - January - February 2024 - 18
PLANSPONSOR - January - February 2024 - 19
PLANSPONSOR - January - February 2024 - 20
PLANSPONSOR - January - February 2024 - 21
PLANSPONSOR - January - February 2024 - A Focus on Guaranteed Income
PLANSPONSOR - January - February 2024 - 23
PLANSPONSOR - January - February 2024 - 24
PLANSPONSOR - January - February 2024 - 25
PLANSPONSOR - January - February 2024 - 26
PLANSPONSOR - January - February 2024 - 27
PLANSPONSOR - January - February 2024 - Navigating ESG
PLANSPONSOR - January - February 2024 - 29
PLANSPONSOR - January - February 2024 - Are You on Track?
PLANSPONSOR - January - February 2024 - 31
PLANSPONSOR - January - February 2024 - Demographic Shifts
PLANSPONSOR - January - February 2024 - Advice on Advice
PLANSPONSOR - January - February 2024 - 34
PLANSPONSOR - January - February 2024 - 35
PLANSPONSOR - January - February 2024 - Fiduciary Best Practices
PLANSPONSOR - January - February 2024 - 37
PLANSPONSOR - January - February 2024 - 2 Distinct Roles for When Sponsors Act
PLANSPONSOR - January - February 2024 - The DOL’s Not-So-New Fiduciary Rule
PLANSPONSOR - January - February 2024 - Continuous Good Service
PLANSPONSOR - January - February 2024 - Cover3
PLANSPONSOR - January - February 2024 - Cover4
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