The U.S. Department of Labor is finalizing a rule allowing companies to prioritize ESG policies when choosing retirement plans. It's the last phase of a nearly two-year effort to reverse a Trump-era rule banning the practice. The department said it was implementing the rule to "remove barriers to plan fiduciaries' ability to consider climate change and other environmental, social and governance factors when they select investments.
The rule, "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights," follows an executive order Biden issued last May
- The rule change "will bolster the resilience of workers' retirement savings and pensions by removing the artificial impediments - and chilling effect on environmental, social and governance investments - caused by the prior administration's rules."
Hegar also took issue with the announcement's timing.
- Biden's DOL finalized a rule that reversed rules set by the Trump administration that ensured retirement fund managers lived up to their fiduciary duties by selecting investments based solely on 'pecuniary factors.'
- Fund managers will be free to consider climate change and other ESG factors rather than aiming to deliver the highest possible returns for American retirees.
The DOL's ESG directive comes after Biden threatened to tax the oil and natural gas industry for not producing enough petroleum or for making too much of a profit when it does
- He's also blamed the industry for rising gas prices, while it's maintained that rising costs are a direct result of the president's energy policies.
- In August, Hegar directed state agencies to divest from companies that were prioritizing ESG.
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