DOL Guidance on ERISA Proxy Voting: Fiduciary Status and Non-Financial Factor Focus

The U.S. Department of Labor (DOL) has issued Technical Release 2026-01 (the "Technical Release"), which addresses proxy voting by ERISA plans and the circumstances in which a proxy advisory firm's services could be treated as ERISA fiduciary conduct - either because the firm has discretion or control over proxy voting, or because its recommendations could be viewed as "investment advice" under ERISA's existing framework.

The Technical Release does not change ERISA's fiduciary standards or create new requirements. Instead, it largely restates the DOL's long-standing position that proxy voting and other shareholder rights associated with ERISA plan-owned shares are treated as "plan assets," and that decisions about exercising those rights are subject to ERISA's fiduciary duties of prudence and loyalty. The DOL confirms that a proxy advisory firm, to the extent it has discretion or control over a plan's shareholder rights, or to the extent it provides advice that otherwise meets ERISA's five-part investment advice fiduciary test, would be considered a "fiduciary" to the plan.

At a broader level, the Technical Release reflects the continuing policy debate across Democratic and Republican administrations over how ERISA's "exclusive purpose" and prudence standards should be applied to proxy voting, shareholder engagement, and related activities. In recent years, DOL guidance and rulemaking in this area have shifted in emphasis from one administration to the next - at times underscoring that fiduciaries must anchor proxy voting decisions in their assessment of economic value and risk-adjusted return, and at other times acknowledging that certain issues commonly framed as "non-financial" (including ESG-related topics) may be considered where the fiduciary reasonably concludes they are likely to affect the economic value of the investment. Consistent with that ongoing back-and-forth, the Technical Release reiterates this administration's view that fiduciaries "must consider only those factors that relate to the economic value of the plan's investment" and must act "for the exclusive purpose of maximizing risk-adjusted financial returns." The Technical Release also cautions that fiduciaries may risk violating ERISA if they use proxy voting to further legislative, regulatory, public policy, political, social, or other non-pecuniary objectives that have no connection to enhancing the economic value of the plan's investment.

Although the Technical Release does not reflect a change in law, it highlights the DOL's current policy posture and serves as a reminder that proxy voting arrangements involving ERISA plan assets can carry fiduciary implications for both plans and their service providers. In light of that framing, asset managers that provide proxy voting services for ERISA clients (directly or indirectly) may want to review any existing proxy advisory engagements to (i) confirm the scope of services the proxy adviser is providing (e.g., research only, recommendations, policy development, discretionary voting, etc.); and (ii) consider whether the service model could be viewed as involving discretion over shareholder rights or advice that could satisfy ERISA's five-part investment advice fiduciary test. To the extent a proxy advisory firm may be viewed as an ERISA fiduciary, the manager that engaged the firm should consider discussing with the proxy advisory firm how it approaches ERISA fiduciary compliance in connection with developing recommendations, setting policies, and/or exercising voting authority, particularly in light of the Technical Release.

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