Lawsuit alleges Biden Administration ESG rules hurts investors by de-emphasizing investment returns

The Wisconsin Institute for Law and Liberty is once again suing President Biden’s administration, this time over rules for environmental, social, and governance investing.

WILL filed a federal lawsuit Tuesday in federal court in Milwaukee that claims the new ESG rule signed by Biden’s Labor Department last December undermines the long-standing federal law that requires retirement plan managers to act in the best interests of their clients.

“The fundamental principle that retirement investments are made for the benefit of retirees is now under attack via the guise of an investing fad often referred to as 'ESG,' which by its nature focuses on environmental, social, and governance goals rather than maximizing investment returns,” the suit states. “According to the Biden administration, ESG can also be referred to as ‘sustainable investing, socially responsible investing, and impact investing.’ Whatever euphemism one wishes to use – ‘people over profits,’ ‘standing for something more,’ etc. – the ESG investment trend contemplates a focus on policy objectives rather than financial returns.”

WILL claims the Employment Retirement Income Security Act of 1974 requires investment managers to act as fiduciaries, and forbids them from mismanaging or abusing retirement dollars.

WILL Associate Counsel, Kate Spitz, said investing with an eye toward social or climate changes is abuse and mismanagement.

“By injecting highly partisan issues – like climate change and racial justice – into investment strategy, the Biden Administration is jeopardizing the retirement income of over 140 million Americans,” Sitz said in a statement. “Their new rule far exceeds the law and their constitutional authority.”

One of the retirees named in the suit, Rick Braun, said his retirement is now in jeopardy because of the Biden Administration’s focus on wokeness.

“I have been financially responsible, saving to have a future. Now it’s all at risk because politicians in Washington want to gamble it away on their favorite pet projects and causes,” he said in his statement.

The lawsuit comes after WILL signed a letter to Congress, along with over 100 other organizations, asking lawmakers to overturn the rule.

The lawsuit is also WILL’s seventh against the Biden Administration over the past two years.