Republican-led states filed a federal lawsuit Thursday against the Department of Labor over a rule set to take effect Monday that would allow retirement fund managers to consider climate change and other factors under environmental, social and governance investing principles, or ESG.
The attorneys general from 25 states argued that the ESG rules soon to be enacted would violate federal law, saying fiduciaries could jeopardize Americans’ retirement funds and not focus solely on maximizing returns.
“The Biden administration is promoting its climate change agenda by putting everyday people’s retirement money at risk,” Utah Attorney General Sean Reyes, the Republican who led the lawsuit, said in a statement. “Permitting asset managers to direct hard-working Americans’ money to ESG investments puts trillions of dollars of retirement savings at risk in exchange for someone else’s political agenda.”
The Labor Department did not immediately respond to a request for comment.
The action is part of a broader, multi-billion-dollar war being waged against ESG investing across the country, a campaign by GOP state officials who have collectively divested billions in state pension funds from large financial institutions in the name of combating “woke” capitalism.
The GOP-led states alleged in their lawsuit that the Labor Department is violating the Employee Retirement Income Security Act of 1974, which aims to offer consumer protections with minimum standards for retirement savings to prevent mismanagement and abuse.