Blog

ESG

Proxy Disclosures May Shift Fiduciary Obligations

Collectively the DOL’s and SEC’s proposed proxy voting rules create an opportunity for plan fiduciaries to exercise greater influence over corporate governance issues, including ESG matters. With these proposals ERISA fiduciaries may come under greater scrutiny for how they develop, monitor and implement corporate governance and proxy voting. Once there is greater transparency around how fiduciaries are exercising their governance responsibilities, participants may want greater say on what is in their best interests.

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Direct Indexing

Is Tax Loss Harvesting Really a Benefit of Direct Indexing?

Direct indexing is probably best suited to investors motivated by particular issues, beliefs or highly specific objectives. Improved tax management and efficiency can drive significant value, but maximizing this benefit requires understanding an investor’s specific facts and circumstances in a given tax year and long-term planning.

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Proxy Voting

Proxy Advisors Add A Moral Hazard

Given proxy advisors’ monopolistic position and because no one is publicly measuring or tracking the impact of their recommendations means that proxy advisors are generally protected from backlash associated with the potential downside risks and losses shareholders may face, creating a moral hazard.

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Disclosures

Who Decides What is Material With ESG Disclosures?

Regardless of legislative points of view, standard disclosures across sustainability and ESG topics, regardless of materiality in a specific company’s instance, is necessary to provide a foundation for evaluation across firms and time.  Allowing companies to provide contextual guidance about how such disclosures fit into risk management activities or long-term strategy also provides useful information upon which investors and other market participants can base decisions.

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