Recently, the U.S. Department of Labor released a new highly anticipated final regulation under which retirement plan fiduciaries, such as 401(k) plan sponsors, are permitted—but are not obligated—to consider climate change and other environmental, social and governance (“ESG”) factors when selecting retirement plan investments or exercising shareholder investment rights, such as proxy voting, under the plan. Though only issued last month and generally effective January 30, 2023, the regulation is already under attack by the attorneys general of 25 states, two oil services companies and an oil and gas advocacy group who have sued to stop the regulation from taking effect. See Bloomberg Law, Red States Sue to Block Labor Department’s ‘Woke’ ESG Rule and Plan Adviser, States’ Suit Could Delay DOL-Rule On ESG Investing.
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