Mar. 1, 2023
Carson City, NV — Today, Attorney General Aaron D. Ford has announced he has joined a multistate coalition in fighting back against a legislative effort to overturn a federal rule that helps protect the retirement savings of hard-working American employees. The federal rule, issued by the U.S. Department of Labor, clarifies that fiduciaries of private-sector employee retirement plans, such as 401(k) plans, can consider environmental, social, and governance (ESG) factors when making investment decisions.
“Attacks on ESG factors are obviously politically motivated and, if successful, will strain the ability of Americans to responsibly and smartly invest,” said AG Ford. “Good investing practices should not be turned into the next front of a manufactured culture war. Allowing the free flow of information in connection with investing processes is consistent with the pillars of responsible capitalism.”
In the letter issued today to members of the U.S. Congress, the coalition asserted that the Department of Labor rule helps fiduciaries make investment decisions that better address the long-term investment horizons of the employees they represent by allowing them to consider ESG factors, particularly the costs and impacts of climate change.
For many people who work in the private sector, employee benefit plans such as 401(k)s make up the bulk of their retirement savings. The consideration of ESG factors, like many other factors, can make a significant difference in the value of employees’ savings and their financial security after retirement.
As an example, rising temperatures and more frequent and severe weather events are already damaging infrastructure, disrupting businesses and threatening public health in the United States and around the globe. In the past five years alone, extreme weather events caused or exacerbated by climate change, such as hurricanes, wildfires, extreme heat, and extreme drought, have cost U.S. companies nearly $600 billion — a figure that is only expected to rise.
After the Department of Labor issued the rule in December 2022, two members of the U.S. Congress introduced a joint resolution attempting to overturn it. In their letter today, the 21 attorneys general pushed back against the joint resolution, asserting that:
- The final rule’s recognition of the potential relevance of ESG factors to investment evaluations is supported by strong data;
- During the 60-day public comment period before the rule was finalized, more than 97% of stakeholders supported the proposal that became the final rule; and
- Opposition to the rule is part of a yearslong campaign to obscure the truth that ESG factors — including the impact of climate change; the benefits of diverse workforces; and the need for cybersecurity protections — affect businesses’ bottom lines.
The letter was sent to Senators Bernie Sanders and Bill Cassidy, chair and ranking member respectively of the Senate Health, Education, Labor and Pension Committee, and Representatives Virginia Foxx and Bobby Scott, chair and ranking member respectively of the House Education and the Workforce Committee.
In submitting the letter, Attorney General Ford was joined by the attorneys general of California, Arizona, Connecticut, DC, Delaware, Illinois, Massachusetts, Maryland, Maine, Michigan, Minnesota, North Carolina, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.
Read the coalition's letter to Congress.