Frankfort, Ky. (January 27, 2023) – Attorney General Daniel Cameron joined a coalition of 25 attorneys general in challenging the Biden Administration’s U.S. Department of Labor (DOL) rule that allows asset managers to make investment decisions based on non-monetary factors. The new policy would permit companies to prioritize ESG (environmental, social, governance) investments over the financial interests of Kentuckians.
“After failing to pass climate change legislation, the Biden Administration is now attempting to use the retirement funds of Americans to finance green initiatives,” said Attorney General Cameron. “The Department of Labor’s new rule is unlawful and wrongly injects politics where it should have no place—the retirement savings of Kentuckians and Americans.”
In their lawsuit, the attorneys general argue that the DOL’s new rule, which takes effect on January 30, 2023, violates the Employee Retirement Income Security Act of 1974 (ERISA) by removing or undermining key retirement income protections. The proposed rule would make it easier for fiduciaries to carry out investment decisions with mixed motives and make it more difficult for beneficiaries to police this conduct.
ERISA sets minimum standards for most private retirement and health plans and requires asset managers to make investment decisions based solely on the financial interests of the beneficiary.
According to DOL, ERISA governs 747,000 retirement plans, 2.5 million health plans, and 673,000 other welfare benefit plans. Employee retirement benefit plans cover over two-thirds of the U.S. population, and more than $12 trillion in plan assets.
This is the latest effort by Attorney General Cameron to protect the financial interests of Kentuckians. Earlier this month, Attorney General Cameron joined a coalition of 21 attorneys general in challenging the ESG investment recommendations of two proxy advisory companies.
Attorney General Cameron joined attorneys general from Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Ohio, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming.
To read the complaint, click here.