Certain portions of the Department of Labor's ESG regulation concerning investment and proxy voting decisions for ERISA fiduciaries will become effective on December 1, 2023 (our alert describing the regulation can be found here).

While much of the regulation took effect on January 30, 2023, the requirements that a "plan assets" fund manager (e.g. a manager having discretion over the assets of an “over 25% fund” which is not designed to be a “directed” or “conduit feeder”)(i) using a proxy advisory firm confirm that such firm's proxy voting guidelines align with the regulation and (ii) either vote proxies proportionally in accordance with ERISA investors' own proxy voting policies or establish its own proxy voting policy and secure ERISA investors' acceptance of it will take effect on December 1, 2023. Therefore, before December 1, 2023, an ERISA "plan assets" manager planning to rely on ERISA client approval of its proxy voting policy should assess whether it has gained such approval from existing clients and, if not, consider reaching out to them. In addition, such a manager should contemplate having the fund's subscription documents reviewed and modified to include an acceptance of the manager's proxy voting policy for new ERISA investors, if not already incorporated.