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U.S. Labor Division finalizes limits on pension-fund voting on company proxies By Reuters

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By Jessica DiNapoli

NEW YORK (Reuters) – The U.S. Division of Labor on Friday finalized a rule requiring pension funds to vote on shareholder proposals solely when there may be an financial cause, a change that will curb buyers from casting their ballots on many company proxies.

The brand new rule is the newest from the Trump administration concentrating on investments specializing in environmental, social and governance (ESG) elements.

Final month, the Division of Labor finalized a rule clarifying that pensions should put retirees’ monetary pursuits first when allocating investments, relatively than different issues reminiscent of local weather change or racial justice.

The rule “makes clear” that pension fund managers wouldn’t have to vote each company proxy, mentioned Jeanne Klinefelter Wilson, performing assistant secretary on the Division of Labor, on a name Friday afternoon.

“This rule units applicable pointers …to make sure that fiduciaries preserve their eyes centered on the monetary curiosity,” of pension fund beneficiaries, Klinefelter Wilson mentioned.

The Division of Labor’s transfer to rein in voting comes as shareholder initiatives on subjects like local weather change have gained extra backing.

Legislators are already gearing as much as attempt to overturn the foundations in January. U.S. Senator Tammy Baldwin, a Democrat from Wisconsin, on Friday introduced proposed laws that will reverse it and provides extra management to employees in how the shares of their retirement plans are voted.

Her workplace in ready supplies mentioned, “It’s clear that the Division of Labor wrote this rule to forestall employees from utilizing their voices to affect public corporations.”

Senior Division of Labor officers mentioned that the rule was considerably modified from the proposal in August to a extra “principles-based method” aimed toward decreasing the associated fee burden for fund managers.

Tom Quaadman, an govt on the U.S. Chamber of Commerce, applauded the rule, saying it can “guarantee proxy voting follows a clear and unconflicted course of.”

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