SACRAMENTO — California Attorney General Rob Bonta today celebrated President Biden’s veto of a joint resolution that would have harmed the retirement savings of American employees. The resolution that President Biden rejected today aimed to overturn a recently issued U.S. Department of Labor (DOL) rule that 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. Attorney General Bonta led a coalition urging rejection of the resolution, outlining in a letter how ESG factors, particularly the costs and impacts of climate change, have a critical impact on investment savings.
“In California, we believe that information is power, and that investors cannot make informed decisions without all the data and information in front of them,” said Attorney General Bonta. “I thank President Biden for his action today rejecting a misguided, and irresponsible, proposal to deny important information to those managing American retirement accounts. This isn’t about politics or partisanship — it’s about making informed, commonsense decisions to protect retirement savings and facing up to the reality and risks of our climate crisis.”
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 their savings, and ultimately, on the financial security of employees once they retire.
For example, 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 have resulted in nearly $600 billion in costs. This has impacted a wide range of industries, including ones that fiduciaries might consider investing in.