The Biden government is therefore lifting the restrictions of the Trump administration.
The US Department of Labor on Tuesday allowed companies that manage employee retirement savings to factor environmental, social and governance (ESG) criteria into their investments, thereby rolling back restrictions from the Trump administration.
The latter had not issued a formal ban, but considered that the so-called ESG investments had “gaps in the rigor of analysis” with respect to the duties of prudence and loyalty that pension funds must respect.
In a law adopted in late 2020, shortly before Joe Biden’s arrival in the White House, managers of pension plans were consequently ordered to focus on the financial interests of beneficiaries rather than on other non-profit, financial or political objectives.
The new rule announced on Tuesday “clarifies” that pension plan managers can use ESG criteria, current Labor Minister Marty Walsh said in a statement.
This topic has become a new buzzword in recent months for several Republican officials in the United States, who believe that taking ESG into account in financial decisions is an ideological position. Lawmakers in Florida, Texas, and West Virginia, among others, have taken steps to limit its use.
However, responsible investing has gained popularity in recent years with investors or managers who are more sensitive to these issues or who believe they can limit financial risks in the long term.
The organization As You Sow, which campaigns for environmental and corporate social responsibility, has welcomed the initiative.
“Ignoring climate change, racial injustice, violations of workers’ rights or poor governance in managing employee pensions does not make these risks go away,” said the organization’s head Andrew Behar, in a message forwarded to AFP .
“While some officials are playing with retirees’ hard-earned money for political gain, the administration’s new rule will protect employees and their families,” he said.
