March 8, 2022

DOL Requests Information on Protection of Retirement Plans from Climate Risks

Holland & Knight Executive Compensation and Benefits Info Flash
John D. Martini | Nicole F. Martini | Victoria H. Zerjav | Neely Pauley Munnerlyn | Patrick Burri | Lori M. Atkin
Executive Compensation and Benefits Info Flash

The Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL) on Feb. 14, 2022, issued a Request for Information (RFI) to gather input regarding the protection of pensions and retirement savings from climate-related financial risk.


As public awareness of the potential detrimental effects of climate change has grown in recent years, many businesses have taken steps to position themselves as leaders in curbing their environmental footprints and, by extension, sound investments for the future. U.S. employees are looking to their employers to become better corporate citizens and provide environmentally sustainable retirement plan investment options. The federal government has also recognized the need to plan for the financial impact of both physical and transition risks associated with climate change.

On May 20, 2021, President Joe Biden issued Executive Order 14030 on Climate-Related Financial Risks (the Executive Order). The Executive Order tasked the Secretary of Labor with identifying actions that the DOL can take under the Employee Retirement Income Security Act of 1974 (ERISA) and other relevant laws to ensure that U.S. workers' retirement savings are adequately shielded from climate-related financial risk. The Executive Order identified climate-related financial risks in part as the risk of financial institutions failing to "appropriately and adequately account for and measure" the impact of climate change on "physical risk to assets, publicly traded securities, private investments, and companies — such as increased extreme weather risk leading to supply chain disruptions" and as a driver in the "global shift away from carbon-intensive energy sources and industrial processes presents transition risk to many companies, communities, and workers," which failure could ultimately threaten the "life savings and pensions of U.S. workers and families."

EBSA published the RFI to solicit comments and suggestions from interested parties regarding measurement and overall evaluation of climate risk with respect to retirement savings. The RFI is not seeking comments on the recently proposed amendment to the DOL's investment duties (under Labor Regulation §2550.404a-1), as the comment period for that proposal ended Dec. 13, 2021, in which the DOL clarified that investment managers can consider climate change and other environmental, social and governance (commonly called ESG) factors in making investment decisions.

Key Questions Posed by EBSA

In the RFI, EBSA is requesting comments responding to several questions regarding potential actions that the DOL can take to protect retirement savings from climate-related financial risk. Below is a summary of some of the key questions applicable to private retirement plans:

  • How should EBSA address and implement the Executive Order? What agency actions can be taken under applicable retirement savings-related laws to protect the life savings and pensions of U.S. workers and families from the threat of climate-related financial risk?
  • What are the most significant climate-related financial risks to retirement savings and why?
  • Should EBSA collect data on climate-related financial risk for retirement plans? If so, should it do so through new questions on Form 5500, or should EBSA consider new alternatives for collection and delivery of this data?
    • For example, should the Form 5500 aim to collect information about:
      • whether and how plan investment policy statements specifically address climate-related financial risk?
      • whether service providers should disclose or meet metrics related to climate-related financial risks?
      • whether and how plans have factored climate-related financial risk into their analysis of individual investments or investment courses of action?
      • whether and how plan fiduciaries voted on proxy proposals involving climate-related financial risk?
    • Should the DOL conduct an information request/survey on plan sponsor or employee awareness of such risks, and if so, should that information request categorize the information based on plan size (e.g., large plans versus small plans) or segmented in another way?
  • Should administrators of ERISA plans be required to publicly report on the steps that they take to manage climate-related financial risk and the results of those steps? If so, should EBSA consider new alternatives to the Form 5500 for collection and delivery of this data?
  • How can plan fiduciaries best evaluate risk with respect to plan investments? What are the best sources of information for plan fiduciaries to use?
  • Would annuities or other guaranteed life income products transfer climate-related financial risk from the participant to the employer or insurer (in the case of annuities)? If so, should these products be included in defined contribution plans and should EBSA facilitate the inclusion of these producers?
  • Is there a need to educate participants and individual retirement account (IRA) owners about climate-related financial risk?


The RFI and other recent proposed regulations indicate that the DOL is actively creating a framework for the government and retirement plan sponsors' roles in the protection of pensions and retirement savings from climate-related financial risk. Interested parties may wish to take this opportunity to contribute to that new framework by responding to the RFI.

Stakeholders may submit comments to the DOL on or before May 16, 2022. If you would like assistance in submitting comments in response to this RFI or evaluating how these changes will affect your business, contact the authors, another member of Holland & Knight's Executive Compensation and Benefits Team or your primary Holland & Knight attorney.

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