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You can remove folders only from modifiable retention policies.
  1. Go to Admin Console > Governance.
  2. Click the Retention tab.
  3. Click the name of a modifiable retention policy.
  4. In the list of folders:
    • Hover over the folder row and click Remove at the right end of the row.
    • Click to select one or more folder rows, and then click Remove at the top of the table. (You can also use keyboard shortcuts, Shift/Command + click to select multiple rows or Shift/Command + A to select all rows.)
  5. In the conformation dialog box, click Remove.
The policy is updated immediately.