News Release: Labor Department Will Not Enforce Rules that Impede ESG Investing


March 10, 2021

Carter Dougherty
(202) 251-6700

Labor Department Will Not Enforce Rules that Impede ESG Investing

Washington, DC – In a significant reversal, the Department of Labor (DOL) today announced they will not enforce the anti-sustainable investing rules that were hastily published in the final days of the Trump administration. The two rules, which went into effect in January 2021, would have made it much harder for retirement plans to integrate environmental, social and governance (ESG) risks into their investment practices.

“Retirement plans and pension managers can breathe a sigh of relief today, knowing that they won’t be unfairly penalized for prudently integrating ESG factors in their investments. Next, we need affirmative guidance on how fiduciaries must integrate ESG-related factors when selecting investments, engaging with investee companies, and voting on shareholder proposals,” said Alex Martin, senior policy analyst at Americans for Financial Reform Education Fund.

In a press release, DOL recognized the growing body of evidence that ESG factors are financially material and that retirement plans should integrate them into their investment decisions. Ali Khawar, Principal Deputy Assistant Secretary for the DOL Employee Benefits Security Administration, expressed concern that the Trump rules have already had a chilling effect on sustainable investing in retirement plans, and added that the DOL is undertaking a broader review “to determine how to craft rules that better recognize the important role that environmental, social and governance integration can play in the evaluation and management of plan investments, while continuing to uphold fundamental fiduciary obligations.”

In the coming months, Labor Secretary nominee Marty Walsh, if confirmed, must continue this review process and develop forward-looking investing rules that protect the retirement savings of U.S. workers and retirees. Americans for Financial Reform Education Fund applauds these early efforts taken by the Biden Administration and Mr. Khawar on sustainable investing, and we look forward to engaging throughout the review process.