Trump Administration Drops Defense of Rule Allowing Retirement Plans to Provide More Sustainable Investment Options
The Trump administration announced Wednesday, May 28, that it plans to overturn a Department of Labor rule allowing managers of private retirement plans to consider environmental, social, and corporate governance (ESG) factors when making investment decisions and voting on shareholder proposals. Lawyers with the Department of Labor informed the US Court of Appeals that it would engage in new rulemaking this spring in order to rescind the rule.
In response to the news, Ben Cushing, director of the Sustainable Finance campaign at the Sierra Club, issued the following statement:
“Climate change is a growing threat to workers’ retirement security. Dismantling safeguards for responsible investing is a dangerous disservice to the millions of Americans saving for the future. Retirement plan managers should be empowered to consider all relevant financial risks — including those stemming from the climate crisis — not be forced to ignore them. This is yet another example of political interference by Republicans that puts ideology and special interests ahead of evidence, weakening investor protections at a time when stronger guardrails are urgently needed. As federal officials roll back protections for private retirement plans, state and local leaders must affirm that public pension funds should proactively address climate and sustainability risks.”
BACKGROUND
In March 2023, the Sierra Club applauded former President Biden for issuing his first presidential veto to reject an attempt by House and Senate Republicans to use the Congressional Review Act (CRA) to undo the rule.
In February 2023, the Sierra Club joined dozens of investors, workers, and advocacy groups in sending a series of letters to House and Senate lawmakers opposing Republican attempts to circumvent the DOL rule.
In November 2022, the Sierra Club applauded the DOL for restoring the rule, saying the decision “lays the groundwork for future rulemakings that establish affirmative duties of retirement fund fiduciaries to manage climate and other systemic risks.”
In December 2021, during the DOL public comment period, the Sierra Club joined the Americans for Financial Reform Education Fund and a dozen advocacy groups in showcasing support for the proposed rule.