Labor Department drops defense of ESG rule (2025)
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The Department of Labor (DOL) filed court documents last week indicating it will stop defending a Biden-era rule allowing ESG considerations in retirement plans. The agency said it plans to propose a new rule to replace it.
The rule has faced Republican opposition since 2022 but survived both legal and legislative challenges, including a congressional repeal effort vetoed by President Biden. The DOL’s reversal continues a broader shift away from ESG under the second Trump administration.
According to ESG Dive:
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The Biden administration’s Labor Department finalized the rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” in 2022, and it has been in effect since January 2023. At the time, the agency said the rule overturned guidance from the first Trump administration which had a “chilling effect” on fiduciaries. The rule allowed retirement plan fiduciaries to consider ESG and other collateral benefits to break a tie when two or more investments “equally serve” the financial interests of the plan and it would be imprudent to invest in both or all options. The Republican-led states leading the lawsuit have argued that the rule runs afoul of the Employment Retirement Income Security Act of 1974. However, a federal district court judge has twice ruled that the rule was permissible.[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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