By Eric Reed
Source: Yahoo! Finance
The new rule is written broadly, which means that it may let employers explore several different categories of investing. But it specifically aims to create more opportunities for ESG, or “Environmental, Social and Governance,” investing. Otherwise known as impact investing, these are portfolios that invest around specific social and political goals. For example, a portfolio may explicitly choose not to invest in fossil fuels and dirty industries, or it may proactively invest in renewable energy companies.
ESG investing has grown aggressively in recent years. A September study by Dow Jones called this “the number one growth opportunity for investment professionals,” expecting the sector to more than double between 2022 and 2025.
However employer-sponsored retirement funds have recently avoided this category of investing due to a rule passed by the Trump administration.