Biden’s Climate-Friendly 401(k) Rule Unties Hands on Wall Street

Workplace retirement plan asset managers stand to gain more regulatory freedom under the Biden administration’s new approach to 401(k) climate change investing, even though the regulation’s immediate effects on actual plan offerings may be less dramatic.

A new US Labor Department rule announced last week will let employers consider environmental, social, and corporate governance factors when choosing and monitoring the investments their workers use to save for retirement.

Wall Street asset managers such as Vanguard Group Inc. and BlackRock Inc. for years have been integrating ESG criteria into their institutional and retail investing wings. They can now level the playing ...