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Starting Monday, pension plan managers will be able to consider a company’s environmental, social and governance (ESG) positions when making investment decisions, as a Biden administration rule takes effect — over the objection of 25 Republican-led states.
The Labor Department rule, first announced in November, reverses restrictions put in place under the Trump administration. It now faces a lawsuit from Utah and two dozen other states, which argue it violates the Employees Retirement Income Security Act (ERISA) of 1974, which states that plan assets should be held for the exclusive purpose of providing benefits to plan participants and that trustees should act solely in the interests of the participants. GOP-led states say that by focusing on social and political agendas, plan managers will undermine the growth potential of participants’ accounts.
“Allowing asset managers to funnel hard-working Americans’ money into ESG investing puts billions of dollars in retirement savings at risk in exchange for someone else’s political agenda,” he said. Utah Attorney General Sean Reyes told FOX Business last week, saying the rule “needs to be stopped.”
The lawsuit was filed Thursday in federal court in Texas. The court has yet to rule on the injunction request. If granted, the rule would be blocked for the duration of the case, depending on any subsequent appeals.
25 STATES ATTACH BIDEN ADMINISTRATION WITH CLIMATE ACTION LAW TARGETING AMERICANS’ RETIREMENT SAVINGS
West Virginia State Treasurer Riley Moore opposes BlackRock’s agenda and discusses the state’s new bill that will protect resident funds from ESG investing.
In recent years, large asset managers and financial institutions have increasingly focused on prioritizing ESG factors when making key investment decisions. In particular, they aim to invest in companies based on the efforts of these companies to fight against climate change and reduce their carbon footprint.
Companies like BlackRock, State Street and Vanguard, which collectively manage trillions of dollars in assets, have been at the forefront of the ESG movement. In response to the growing movement, Republican state attorneys general and financial officers have retaliated, rescinding contracts with the companies and threatening legal action over how they handle client investments.
Louisiana Attorney General Jeff Landry expresses concern that Wall Street banks have “woken up” asset buying at the expense of other investments to improve their social policy on “Cavuto: Coast to Coast “.
TEXAS SUBPOENAS BLACKROCK FOR ESG PUSH DOCUMENTS
The Labor Department did not respond to Fox Business’ request for comment on the lawsuit. In November, Labor Secretary Marty Walsh said the new rule would “help plan members get the most out of their retirement benefits.”
Republicans, however, believe it does more to advance the Biden administration’s green agenda than it does to help investors manage their retirement savings.
Labor Secretary Marty Walsh reacts to the November jobs report and explains how the 2023 economic outlook on “Varney & Co.” (FOX Business/Fox News)
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“This rule is an affront to all Americans concerned about their retirement account,” Texas Attorney General Ken Paxton said in a statement to FOX Business. “For the Biden administration to now choose to risk the financial security of working-class Americans to advance a woke political agenda is insulting and illegal.”
Thomas Catenacci of Fox Business contributed to this report.