US Supreme Court decision could affect Biden’s ESG investing rule
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An impending Supreme Court decision that may restrict federal agency powers could have a big effect on a challenge by Republican-led states against a rule from President Biden.
The rule allows socially conscious investing in employee retirement plans.
The 26 states, led by Utah and Texas, have asked the appeals court to wait until the Supreme Court decides on agency powers before ruling on whether to block the Department of Labor’s rule, expected by the end of June.
On Wednesday, the Supreme Court considered a dispute related to a government program monitoring the overfishing of herring near New England’s coast.
Two fishing companies urged the justices to limit or overturn a 1984 legal precedent, known as “Chevron deference,” requiring judges to defer to reasonable federal agency interpretations of ambiguous US laws.
In a lawsuit over the investing rule, Texas-based US District Judge Matthew Kacsmaryk stated in September that US retirement plan laws were unclear about including environmental, social, and corporate governance (ESG) factors in investment decisions.
However, he found the Labor Department’s position reasonable, allowing plans to consider these factors alongside traditional financial considerations, and thus, he declined to block the rule pending the lawsuit’s outcome.
The states argued that the rule wrongly introduces political motives into investment choices impacting the retirement savings of millions.
A subsidiary of Liberty Energy and an oil and gas trade group are also plaintiffs in the lawsuit.
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