Press Release

Twenty AGs Support Department of Labor’s Rule on Prudent Investing

Amicus brief filed by the AG coalition stresses the importance of the rule for their communities.

New York, NY — Yesterday, a coalition of 20 state attorneys general (AGs) led by New York Attorney General Letitia James filed an amicus brief supporting the Department of Labor’s November 2022 rule titled, Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights. The rule makes it clear that fiduciaries are permitted to consider environmental, social, and governance (ESG) factors in their investment decisions as needed to protect the bottom line.

In their brief, the AGs highlight how the rule will provide widespread economic benefits to their states, which “are home to approximately 141 million citizens, comprising more than 42% of the national population” and likely a similar proportion of participants in employer-sponsored retirement plans. The AGs point to studies that show financial benefits of considering these factors and the fact that these considerations are permitted under state law in many states in line with the same fiduciary principles that apply under the Employee Retirement Income Security Act (ERISA).

“ESG factors and climate risk can be important considerations when fiduciaries make investment decisions,” said Bethany Davis Noll, Executive Director of the State Energy & Environmental Impact Center. “This rule provides clarity in line with the long term economic needs of communities and ERISA and the need to protect against downside risks.”

Background — On November 22, 2022 the Department of Labor issued its final rule clarifying that Employee Retirement Income Security Act-regulated fiduciaries are allowed to consider data related to climate change and other ESG-factors while making investment decisions on retirement plans. In their brief, the amici states explained that the Department of Labor has long recognized — and the Department’s 2022 rule clarifies — that fiduciaries managing ERISA plans should consider all factors that minimize risk and maximize return. The states argue that ignoring ESG factors does a disservice to ERISA plan participants because it could leave resources for their retirement on the table and may even constitute a violation of a fiduciary’s duties, as ESG factors are often relevant to risk and return.

On January 26, 2023, a coalition of 25 attorneys general led by Utah Attorney General Sean Reyes, an energy company, a trade association, and a retirement plan participant filed a complaint challenging the Department of Labor’s final rule in the Northern District of Texas, Utah et al. v. Walsh.

On September 21, 2023, Judge Kacsmaryk rejected the plaintiffs’ claims.

On October 26, 2023, the plaintiffs filed a notice of appeal in the U.S. Court of Appeals for the Fifth Circuit.

On January 18, 2024, plaintiffs-appellants filed their opening brief.

On March 21, 2024, defendants-appellees — the U.S. Department of Labor and its Acting Secretary — filed their brief.

For more background on the agency’s final rule see the State Impact Center’s blog post, “DOL Paves the Road Green for Retirement,” which breaks down the specifics of the rule and its impact.

The attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Hawai’i, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Washington, D.C. joined AG James in filing yesterday’s amicus brief.


About the State Energy & Environmental Impact Center: The State Energy & Environmental Impact Center at NYU School of Law is a nonpartisan academic center at NYU School of Law. The Center is dedicated to working towards a healthy and safe environment, guided by inclusive and equitable principles. The Center studies and supports the work of state attorneys general (AGs) in defending, enforcing, and promoting strong laws and policies in the areas of climate, environmental justice, environmental protection, and clean energy.