Ohio has joined a coalition of 25 states suing the Biden Administration to stop it from putting at risk the retirement savings of up to two-thirds of the U.S. population. The lawsuit, co-lead by Ken Paxton, Attorney General of Texas, was filed in the U.S. District Court Northern District of Texas just days before the Labor Department’s Environment, Social, and Governance (ESG) regulation was set to go into effect.
In a press release, Paxton described the multistate lawsuit as an effort to stop a new U.S. Department of Labor (“DOL”) rule that prioritizes woke ESG investing over protecting the retirement savings of approximately two-thirds of the U.S. population, which is around 152 million workers.
He goes on to explain that the rule authorizes fiduciaries to consider nonfinancial factors when administering trust assets, likely leading many to focus on advancing an ESG agenda instead of achieving long-term financial stability for their clients.
Lawsuit: ESG rule is unlawful
Beyond being detrimental to the retirement accounts of hardworking Americans, the rule is fundamentally unlawful, as well as arbitrary and capricious. It violates both the Employee Retirement Income Security Act of 1974 (“ERISA”), which was created to protect retirement assets, and the Administrative Procedure Act. The DOL has also departed from prior policy, as its 2020 rule required that financial factors take precedence over nonfinancial or nonpecuniary factors.
Paxton said, “This rule is an affront to every American concerned about their retirement account. The fact that the Biden Administration is now opting to risk the financial security of working-class Americans to advance a woke political agenda is insulting and illegal. For generations, federal law has required that fiduciaries place their clients’ financial interests at the forefront, and I intend to fight the Biden Administration in court to ensure that they cannot put hard-working Americans’ retirement savings at risk.”
To read the full lawsuit, click here.