Judge Denies DOL Effort To Move Venue on ESG Rule Challenge
A lawsuit challenging the U.S. Department of Labor's (DOL) new rule permitting retirement plan fiduciaries to consider climate change and other environmental, social and governance (ESG) factors when selecting investments and exercising shareholder rights will be heard in Texas and not moved to Washington, D.C., a federal judge ruled. U.S. District Judge Matthew J. Kacsmaryk denied a DOL motion to move the case because the defendants failed to show "good cause" that a transfer was needed, according to a published order. In January, Republican attorneys general from the 25 states, co-led by Ken Paxton of Texas and Sean D. Reyes of Utah, filed a lawsuit in U.S. District Court in Amarillo, Texas, arguing that the rule undermines key protections for retirement savers, oversteps the department's authority under the Employment Retirement Income Security Act (ERISA) and is arbitrary and capricious. The rule in question — Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights — took effect Jan. 30 and allows ERISA fiduciaries to consider ESG factors. It also maintains the department's position that fiduciaries may not sacrifice investment returns or assume greater investment risks as a means of promoting collateral social policy goals.
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