Alabama AG Steve Marshall joins lawsuit over Department of Labor’s ESG rule

Alabama Attorney General Steve Marshall joined 24 other attorney generals last week in a lawsuit over a Department of Labor (DOL) rule that allows environmental, social and governance (ESG) investments in retiree accounts.

The rule would allow 401(k) managers to channel their clients’ money into ESG investing and “undermine the protections for retirees set forth in the Employee Retirement Income Security Act of 1974 (ERISA),” according to Marshall.

“Once again, the Biden administration is attempting to advance its radical climate agenda at the expense of ordinary Americans and their hard-earned money,” Marshall said said in a statement on Monday. “With fears of a possible recession and rampant inflation mounting, it is ruthless to allow wealth managers to risk trillions of dollars in the retirement savings of America’s working class to pursue 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, goes into effect Monday.

The rule will affect two-thirds of the US population’s retirement savings accounts, impacting 152 million American workers and $12 trillion in wealth. The laws contained in ERISA are designed to protect retirement planning from unnecessary risk.

However, by making it easier for advisors to invest based on “their policy goals rather than the financial goals of their clients, the Biden administration is putting Americans’ retirement savings at risk,” according to Marshall.

“[T]The 2022 Investment Duties Rule makes changes that empower trustees to consider and promote “non-financial benefits” in investment decisions,” Marshall and the other attorneys general wrote in the complaint. “Contrary to Congress’ clear intent, these changes make it easier for trustees to act with mixed motives. They also make it difficult for beneficiaries to monitor such behavior.”

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.

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