Alabama Attorney General Steve Marshall joined 24 other attorneys general last week in a lawsuit over a Department of Labor (DOL) rule allowing Environmental, Social and Governance (ESG) investments in retiree accounts.
The rule would allow 401(k) managers to direct their clients' money to ESG investments and "undermine the protections for retirees outlined in the Employee Retirement Income Security Act of 1974 (ERISA)," according to Marshall.
"Yet again, the Biden Administration is attempting to promote its radical climate agenda at the expense of everyday Americans and their hard-earned money," Marshall said in a statement on Monday. "With growing fears of a possible recession and rampant inflation, it is unconscionable to permit asset managers to risk trillions of dollars in working-class Americans' retirement savings in pursuit of an unrealistic and radical environmental agenda. And that is exactly what the Biden Administration intends to do."
The new DOL rule, "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights," will take effect on Monday.
The rule affects two-thirds of the U.S. population's retirement savings accounts, impacting 152 million American workers and $12 trillion in assets. The laws placed in ERISA are intended to protect retirement savings from unnecessary risk.
However, by making it easier for advisors to invest based on "their political goals rather than their clients' financial goals, the Biden Administration places Americans' retirement savings at risk," according to Marshall.
"[T]he 2022 Investment Duties Rule makes changes that authorize fiduciaries to consider and promote 'nonpecuniary benefits' when making investment decisions," Marshall and the other attorneys general wrote in the complaint. "Contrary to Congress's clear intent, these changes make it easier for fiduciaries to act with mixed motives. They also make it harder for beneficiaries to police such conduct."
The 24 other states joining the lawsuit are Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Ohio, South Carolina, North Dakota, Tennessee, Texas, Utah, Virginia, West Virginia and Wyoming.
Read the full complaint here.
To connect with the author of this story, or to comment, email caleb.taylor@1819News.com.
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