Alabama Attorney General Steve Marshall joined 24 other attorneys general last week in a lawsuit opposing a U.S. Department of Labor rule allowing 401(k) managers to direct their clients’ money to ESG (Environmental, Social, & Governance) investments. The conservative AGs are concerned that the rule undermines the protections for retirees outlined in the Employee Retirement Income Security Act of 1974 (ERISA).
“Yet again, the Biden Administration is attempting to promote its radical climate agenda at the expense of everyday Americans and their hard-earned money,” AG Marshall stated. “With growing fears of a possible recession and rampant inflation, it is unconscionable to permit asset managers to risk trillions of dollars in working-class Americans’ retirement savings in pursuit of an unrealistic and radical environmental agenda. And that is exactly what the Biden Administration intends to do.”
Missouri Attorney General Andrew Bailey said, “As Attorney General, I will enforce the law as written, which includes holding the Biden Administration accountable for blatantly violating rules set forth by Congress. My Office will do everything in its power to ensure that Missourians’ hard-earned savings are not diverted by the Biden administration to fund a radical environment ideology.”
The controversial new rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” took effect on January 30, 2023. The rule affects two-thirds of the U.S. population’s retirement savings accounts. It impacts 152 million American workers and $12 trillion in assets. The strict laws placed in ERISA are intended to protect retirement savings from unnecessary risk. The conservative AGs claim that the rule makes it easier for advisors to invest based on their political goals rather than their clients’ financial goals.
The complaint states, “[T]he 2022 Investment Duties Rule makes changes that authorize fiduciaries to consider and promote ‘nonpecuniary benefits’ when making investment decisions. Contrary to Congress’s clear intent, these changes make it easier for fiduciaries to act with mixed motives. They also make it harder for beneficiaries to police such conduct.”
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.
The Biden administration is reportedly pushing environmental, social, and governance investing, which allows retirement fund managers to select stocks of companies based on their positions on social and environmental issues.
This means that retirement savings will be used as leverage to force companies to reduce their carbon emissions and establish racial and gender quotas and other social justice issues rather than focusing entirely on securing as high a return as possible on workers’ lifetime savings.
Marshall was recently inaugurated for his second full term as Alabama’s attorney general. Marshall was appointed AG by then-Gov. Robert Bentley in 2017. Marshall was the long-time district attorney for Marshall County.
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