TN Joins 24 Other States In Suing Biden Administration Over “Woke” Federal ESG Policy
Image Credit: American Advisors Group / Pictures / CC
By Bethany Blankley [The Center Square contributor] –
Twenty-five attorneys general and several other plaintiffs have sued the Biden administration asking the court to halt a federal ESG policy that could negatively impact the retirement savings of 152 million Americans.
The lawsuit was filed in U.S. District Court Northern District Amarillo Division naming Secretary of Labor Martin Walsh and the U.S. Department of Labor as defendants.
It alleges the U.S. Department of Labor created a rule prioritizing “woke” Environmental, Social, and Governance (ESG) investing that jeopardizes the retirement savings of 152 million workers, or two-thirds of the U.S. population.
Last November, the Department of Labor finalized a rule allowing companies to prioritize ESG policies when choosing retirement plans. It was 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 and exercise shareholder rights.”
In response, Texas Comptroller Glenn Hegar said President Joe Biden was “using unelected bureaucrats … to push his radical ESG agenda, undermine the Texas economy and jeopardize our national security and energy independence.
“Even as free market forces begin to erode the ESG fairy tale and expose the intellectual dishonesty and utter lack of transparency in this investment scam, President Biden is using the DOL rulemaking process to double down on policies that put his social agenda above the retirement needs of hard-working Americans.”
Less than two months later, Texas Attorney General Ken Paxton sued, along with 24 other attorneys general.
“Beyond being detrimental to the retirement accounts of hardworking Americans, the rule is fundamentally unlawful, as well as arbitrary and capricious,” Paxton said, noting that it violates the Employee Retirement Income Security Act of 1974 (ERISA), created to protect retirement assets, and the Administrative Procedure Act.
“This rule is an affront to every American concerned about their retirement account,” Paxton said. “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.”
The rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” follows an executive order Biden issued last May. His order directed the federal government to implement policies “to help safeguard the financial security of America’s families, businesses and workers from climate-related financial risk that may threaten the life savings and pensions of U.S. workers and families.”
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,” Acting Assistant Secretary for the Employee Benefits Security Administration Ali Khawar said in a statement last fall. “A principal idea underlying the proposal is that climate change and other ESG factors can be financially material and when they are, considering them will inevitably lead to better long-term risk-adjusted returns, protecting the retirement savings of America’s workers.”
November’s notice followed a March 2021 and October 2021 announcement and included comments received from the public.
Last August, Hegar directed state agencies to divest from 350 individual investment funds and 10 financial companies that were prioritizing ESG, and particularly boycotting oil and natural gas companies, as part of their portfolio. Not long after, Gov. Greg Abbott told The Center Square that the directive was working. He said some of the companies on Texas’ list were making an effort to get off of it.
Florida Gov. Ron DeSantis has also taken action, including prohibiting the state’s retirement fund from investing in funds that prioritize ESG.
Co-leading the lawsuit is Utah Attorney General Sean Reyes; joining them are the attorneys general representing the states of Louisiana, Alabama, Alaska, Arkansas, Florida, Georgia, Indiana, Idaho, Iowa, Kansas, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, South Carolina, Tennessee, West Virginia, Wyoming and the commonwealths of Virginia and Kentucky.
Plaintiffs also include Delaware-based Liberty Energy Inc. and its subsidiary, Texas-based Liberty Oilfield Services LLC, Western Energy Alliance, and James Copeland, a participant in a retirement plan subject to ERISA.
About the Author: Bethany Blankley is a writer at the Center Square, Patheos/Hedgerow, political analyst and former press secretary at Capitol Hill / NY / WDC. Follow Bethany on Twitter @BethanyBlankley.