The web Browser you are currently using is unsupported, and some features of this site may not work as intended. Please update to a modern browser such as Chrome, Firefox or Edge to experience all features Michigan.gov has to offer.
AG Nessel Calls on President Biden to Veto Joint Resolution that Harms Retirement Savings of American Employees
March 20, 2023
LANSING – Michigan Attorney General Dana Nessel, as part of a coalition of 21 states, called on 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, AG Nessel joined a nationwide coalition of 21 states in urging Senators not to pass the joint resolution overturning that rule under the Congressional Review Act, 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. The coalition sent the letter to President Biden to support blocking the resolution from being signed into law, as part of her ongoing fight to protect the health, safety, and financial wellness of workers.
“Employees benefit when the administrators of 401(k) plans consider the ESG factors for companies in their clients’ portfolios,” Nessel said. “The entire nature of the business should be assessed so that investors are aware of how they will be affected by external market realities that can change a company’s bottom line. I support my colleagues in asking President Biden to veto this rule, which could put workers’ long-term financial well-being at risk.”
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 to President Biden and signed by AG Nessel 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.