Judge Rejects GOP-Led Challenge to Biden-Era ESG 401(k) Investing Rule

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A Biden-era Labor Department rule that permits environmental, social, and corporate governance (ESG) factors to be considered by retirement fund managers when they’re choosing investments for 401(k) plans was again upheld by a Texas federal judge in Amarillo, Texas. The DOL’s ESG rule has been challenged since it took effect January 30, 2023. But the judge essentially rejected arguments by 26 Republican state attorneys general, whose challenge to the regulation had been sent back to the district court by the Fifth Circuit.

The ESG rule ended a Trump-era ban prohibiting retirement investment managers from considering ESG factors. In March 2023, the House and Senate voted to block the sustainable investing rule. Biden then vetoed that bill—the first veto of his presidency.