Red States Renew ESG Retirement Rule Challenge in Fifth Circuit

The US Labor Department’s ESG-friendly retirement investing rule violates federal benefits law by authorizing investment decisions that are contrary to workers’ financial interests, more than two dozen Republican state attorneys general told the Fifth Circuit.

The states want the appeals court to vacate a 2022 regulation giving retirement plan fiduciaries greater flexibility to consider “non-pecuniary” factors like environmental, social, and corporate governance goals as a tiebreaker when selecting investments. According to the states, this violates the Employee Retirement Income Security Act, which requires plan fiduciaries to act “solely” and “for the exclusive purpose” of providing financial benefits to plan participants. ...