SIFMA provided comments to FINRA on Notice 22-08, Complex Products and Options. The Notice raises regulatory concerns about retail investors…
DOL Request for Information on Climate-Related Financial Risk
May 9, 2022
Acting Assistant Secretary Ali Khawar
Office of Regulations and Interpretations
Employee Benefits Security Administration
U.S. Department of Labor
200 Constitution Ave.
Washington, DC 20001
Re: Z-RIN 1210-ZA30
Dear Secretary Khawar:
The Securities Industry Financial Markets Association (“SIFMA”)1 appreciates the opportunity to comment on the Department of Labor’s Request for Information on Possible Agency Actions to Protect Life Savings and Pensions from Threats of Climate-Related Financial Risk (the RFI”). While we understand the Department is responding to the Executive Order requiring agencies to assess whether to collect this information,2 we believe the Department should focus on retirement specific aspects when looking at climate-related financial risk. Particularly, the Department should work to avoid issuing any regulatory guidance that overlaps with any SEC guidance that would be designed to protect all investors, including retirement investors.
As we explained in detail in our December 10, 2021, comment letter on the Department’s proposed ESG and proxy voting proposal,3 SIFMA believes the Department should not depart from its’ (and ERISA’s) historic emphasis on process – that ERISA’s prudence requirement centers on maintaining a prudent process in a fiduciary’s analysis of how any particular risk should be incorporated in its fiduciary decision-making. Any type of risk, including for example, climate-related financial risk, interest rate risk, or geopolitical risk, at any given time, could capture the governments or the public’s attention. A regulation that focuses on the issue of the day, rather than the process of considering relevant and material risks could harm plans by forcing fiduciaries to over-weight or under-weight some risks relative to others solely to comply with regulatory guidance.
1 SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.
2 Executive Order 14030 on Climate-Related Financial Risk issued on May 20, 2021, 86 FR 27967 (May 25, 2021)