News & Commentary January 29, 2023

[Omaha Steve]

By Swap Agrawal

Swap Agrawal is a student at Harvard Law School.

In this weekend’s news and commentary, Republican states challenge the Department of Labor’s new ESG investing rule and a lawsuit challenging prison slavery in Arizona is now before the Ninth Circuit.

On January 26, Republican attorneys general from 25 states filed a lawsuit in a federal district court in Texas to stop the Department of Labor’s new ESG rule from going into effect. The rule allows retirement plan fiduciaries to consider climate change and other ESG factors when selecting investments and exercising shareholder rights such as proxy voting. DOL rolled back two rules issued in 2020 by the Trump Administration which retrained fiduciaries’ ability to weigh ESG factors when choosing investments even when those factors would benefit plan participants financially. The Biden rule was considered a healthy compromise between the financial services industry and plan sponsors because it only permitted, rather than mandated, consideration of ESG factors. “Climate change and other environmental, social and governance factors can be useful for plan investors as they make decisions about how to best grow and protect the retirement savings of America’s workers,” said Assistant Secretary for Employee Benefits Security Lisa M. Gomez. The final rule was published on December 1, 2022, and is set to go into effect on January 30, 2023. Morningstar plans to launch an ESG Pooled Employer Plan with an investment lineup that would consider financially material ESG factors early this year, and other new offerings are likely to follow in the coming months.

FULL story: https://onlabor.org/january-29-2023/