Murray, Smith Applaud Biden Administration Step To Support Sustainable Investing

Department of Labor reverses course from Trump Administration, affirms ERISA fiduciaries may consider environmental, social, and governance factors in investment decisions

Senators Murray and Smith: “This new rule will help build a future for families that is more just, diverse, sustainable, and financially secure.”

(WASHINGTON, D.C.) – Today, U.S. Senator Patty Murray (D-WA), Chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Senator Tina Smith (D-MN), a member of the HELP Committee, released the following statement in response to the Biden Administration’s new proposed rule that ensures financial advisors can consider environmental, social, and governance (ESG) criteria in their investment decisions—for example, whether investments that are financially beneficial also promote racial justice, address climate change, or protect human rights.

“Financial security is about planning for the future, so it’s just common sense that ERISA fiduciaries be allowed to consider the environmental, social, and governance factors that are shaping the future. The Biden Administration’s step to acknowledge this reality is a win for workers, retirees, investors, businesses, communities, the environment—everyone,” said the Senators. “This new rule will help build a future for families that is more just, diverse, sustainable, and financially secure.”

Senators Murray and Smith were vocal opponents of the Trump rules to restrict the use of ESG investment strategies. They wrote several letters arguing how the move was at odds, not only with efforts across the country to promote diversity and racial equity, and to be more sustainable, but also with what’s best for workers and retirees given evidence that ESG investments provide comparable returns and potentially lower risk to traditional funds, and have outperformed such traditional investments in the past several years.

The Biden Administration’s announcement today proposes to reverse the Trump-era rule on this issue and provides legal certainty to ERISA plans that choose to consider ESG factors in their investment decisions or offer ESG investment options to plan participants—similar to what the Senators advocated through legislation they introduced last year. The Biden Administration’s proposal also would reverse a Trump-era rule to undermine the ability of fiduciaries to use proxy voting to advance the interests of their clients.