In Wisconsin and Texas district courts, plaintiffs are suing government officials to block the Labor Department’s new rule on ERISA investment duties with regard to environmental, social, and governance factors. They contend that the so-called Biden Rule violates the law and, in the case of the Texas complaint, has hurt businesses.
The reason for the similarity is that both rules are tightly constrained by ERISA, as interpreted by the Supreme Court in 2014 . The Supreme Court, in a unanimous decision, said very clearly that fiduciary investment decisions must be made for the exclusive purpose of maximizing risk-adjusted returns. Both the final Biden Rule and the final Trump Rule make it very clear that a fiduciary cannot make an investment decision for any other purpose.