Attorney General Bonta Calls on President Biden to Veto Joint Resolution That Harms Retirement Savings of American Employees

OAKLAND – California Attorney General Rob Bonta today called on U.S. President Joe Biden to veto a joint resolution that would harm the retirement savings of American employees. The resolution aims 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. Last week, Attorney General Bonta led a nationwide coalition of 21 states in urging Senators not to pass the joint resolution, outlining in a letter how ESG factors, particularly the costs and impacts of climate change, have a critical impact on investment savings. The letter warned that if the DOL rule was overturned, hardworking American employees’ retirement funds would suffer. The Senate failed to heed the warning. Today, Attorney General Bonta sent the letter to President Biden to support blocking the resolution from being signed into law, as part of his ongoing fight to protect the health, safety, and financial wellness of workers. 

“This isn’t about politics or partisanship – it’s about facing up to the reality of climate change and making smarter decisions for our future,” said Attorney General Bonta. “The U.S. economy is rapidly being reshaped under the weight of the economic, environmental, and human costs of climate change. If fiduciaries ignore ESG factors, the hardworking American employees whose retirement funds they manage will be at a disadvantage. That's why I urge President Biden to reject this irresponsible legislative effort that will only serve to hurt the future and financial security of American workers. Investors need more transparency and data about the impact of climate change, not less.”

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 nearly $600 billion. This has impacted a wide range of industries, including ones that fiduciaries might consider investing in. 

The DOL rule, issued in December 2022, frees fiduciaries from restrictions that discourage them from taking such ESG factors into account. The letter, sent today to President Biden and signed by Attorney General Bonta along with 20 attorneys general, asserts that opposition to the rule is part of a years-long 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 also points out that more than 97% of stakeholders supported the rule.

The joint resolution is on its way to President Biden’s desk to be signed into law or vetoed. A copy of the attorney generals’ letter can be found here.