Over two dozen states filed a lawsuit against the Department of Labor (DOL) Thursday, claiming its recent ruling on plan fiduciaries prioritizes woke Environmental, Social, and Governance (ESG) investing over protecting the retirement savings of millions of Americans.
The lawsuit, co-led by Texas Attorney General Ken Paxton along with three energy companies, challenges a DOL rule that authorizes fiduciaries, such as pension plan managers, to consider non-financial factors when administering client assets, according to the lawsuit. The suit alleges that, as the rule allows fiduciaries to focus on ESG factors over long-term financial stability, the assets of 152 million workers could be jeopardized.
“This rule is an affront to every American concerned about their retirement account,” said Attorney General Paxton in press release. “The fact that the Biden Administration is now opting to risk the financial security of working-class Americans to advance a woke political agenda is insulting and illegal. For generations, federal law has required that fiduciaries place their clients’ financial interests at the forefront, and I intend to fight the Biden Administration in court to ensure that they cannot put hard-working Americans’ retirement savings at risk.”
BREAKING: I’m co-leading a lawsuit against the Biden Admin to end a rule that risks millions of Americans’ retirement accounts by allowing certain fund managers to prioritize woke ESG investments over achieving financial stability for clients.https://t.co/sBOMlxKZ1P
— Texas Attorney General (@TXAG) January 26, 2023
The DOL initially released the rule in November after overturning a Trump administration rule that barred companies from evaluating ESG factors when making investment decisions. The DOL believed the Trump-era rule “unnecessarily restrained” the fiduciaries’ ability to weigh ESG factors that benefit plan participants financially.
After the rule was released, experts told the DCNF that the rule “betrays” the interests of those who have funded trust assets and places “enormous pressure” on fiduciaries to focus on ESG factors over more significant factors.
“The problem with the DOL rule is not that it permits fiduciaries to consider ESG factors,” Amberwave Partners co-founder and portfolio manager Dan Katz told the DCNF. “The problem with the rule is that it adds to the enormous pressure on fiduciaries to overemphasize ESG factors over other, typically more significant, factors that ESG ignores.”
“This is a mistake and betrays the interests of the people who the US Department of Labor is supposed to serve: American workers and retirees,” Strive Asset Management Executive Chairman Vivek Ramaswamy previously told the DCNF.
The DOL did not immediately respond to the DCNF’s request for comment.
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Republished with permission from Daily Caller News Foundation