The US Department of Labor (DOL) is contemplating overhauling a rule from Joe Biden’s Presidency which permits private-sector retirement plans to consider ESG factors when making investments. In a filing in the 5th US Circuit Court of Appeals in New Orleans this week, the DOL said its incoming leadership had “determined that it intends to reconsider the challenged rule, including by considering whether to rescind the rule”. The rule has been challenged in court by 26 Republican-led states, including Texas, which claimed it violated the 1974 Employee Retirement Income Security Act (ERISA) and undermined key protections for the retirement savings of more than 150 million workers. The filing by the DOL also sought to delay the appeal of 2023 litigation filed by the 26 state attorneys-general and others challenging the legality of the ESG rule. In February, a federal judge in Texas upheld the rule, asserting that the rule was not contrary to ERISA, and that any arguments contrary to this were “wooden textualism that courts should endeavour to avoid”. Judge Matthew Kacsmaryk, who was nominated to the position by Donald Trump in 20217, previously rejected similar arguments in a 2023 ruling.
