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A few of our clients here in Santa Fe read an article in today’s local paper by Doug Lynam, a partner at LongView Asset Management here in town. The article is headlined “Fight the power, save the planet”, which doesn’t sound particularly scary – but one of our clients asked if there really was a “bizarre new law that prevents socially responsible investing?!?!”, so we took a close look.

The first few paragraphs make us sound like modern-day Robin Hoods, risking our necks to provide socially-conscious portfolios to our clients! The Trump Administration’s Department of Labor has, according to Doug, recently warned investment advisors that “they could violate the law if they engage in socially responsible investing”, and might be fined or have our licenses revoked if we’re “convicted”. Concerned, for obvious reasons, we fired up Google and did a quick search on “Field Assistance Bulletin 2018-1”.

The first thing we noticed about this Bulletin is that it’s “old news”: as the title implies, it was issued in early 2018, nearly two years ago. And it’s not a law, or a binding regulation, or a new rule. Rather, it’s a low-level policy statement about the ways in which we can expect the Department to implement a couple of previous, Obama-era rules, which were generally pro-SRI – and which were not amended or rescinded by this new guidance. Interestingly, in the commentary from our SRI-industry colleagues at the time, the Bulletin was widely panned as practically meaningless – the commentary blogs from the Intentional Endowments Network and The Forum for Sustainable and Responsible Investment are particularly incisive.

Doug Lynam is certainly right to point out that the performance worries that appear to have motivated the Trump-era Department of Labor to make this statement are simply inaccurate. And we agree that notions of “fiduciary duty” for investment advisors really should include SRI / ESG criteria, since we can’t really do long-term investing without those criteria. But there’s no cause for alarm today from, and no reason to fear that ethical investing has been made illegal by, this two-year-old note from Trump’s Department of Labor.