Attorney General Bonta Leads Coalition of 21 States in Fight to Protect Retirement Savings of American Employees

Wednesday, March 1, 2023
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OAKLAND — California Attorney General Rob Bonta today led 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 rule, issued by the U.S. Department of Labor (DOL), 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. In the letter issued today to members of the U.S. Congress, Attorney General Bonta and 20 attorneys general asserted that the DOL 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.

“Thousands of Americans trust their 401(k)s or other retirement accounts to keep their future safe and bring them peace of mind,” said Attorney General Bonta. “They deserve to have investment managers armed with all the information needed to make smart decisions about their money. The fact is: The costs of climate change are only going to rise. Ignoring or denying its impact will only put investors at a disadvantage. I urge Congress to reject any attempts to overturn this vital rule, which empowers those managing everyday Americans' retirement savings to make decisions with those risks in mind.”

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, 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. This has impacted a wide range of industries, including ones that fiduciaries might consider investing in.

After the DOL rule was issued in December 2022, two members of Congress introduced a joint resolution in an attempt 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 DOL 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 Bonta was joined by the attorneys general of Arizona, Connecticut, the District of Columbia, Delaware, Illinois, Massachusetts, Maryland, Maine, Michigan, Minnesota, North Carolina, New Jersey, New Mexico, Nevada, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington.

A copy of the letter can be found here.

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