GOP leaders from 24 states warn Biden's climate agenda is putting Americans' retirement funds at risk

Republican lawmakers from 24 states urged President Joe Biden to strike down a proposed regulation that would require retirement investment managers to prioritize climate change concerns when managing the retirement portfolios of American workers.  

According to the letter, the Department of Labor's Employee Benefits Security Administration submitted a rule that "would irrationally require fiduciaries to elevate immaterial and speculative risks in employee retirement savings investment decisions,” Fox Business reported.

"Instead, fiduciaries must be held to their duties of prudence and loyalty by considering only the material financial or pecuniary factors of each potential investment."

In the letter, the group of Republican attorneys general and treasurers further warn that the Employee Retirement Income Security Act's (ERISA) rules bar investment managers from subordinating "the interests of retirement plan participants and beneficiaries to unrelated or other objectives."

After all, DOL’s proposed rule activates an executive order signed by Biden on May 20, directing DOL to consider ERISA rules that would "protect the life savings and pensions of United States workers and families from the threats of climate-related financial risk."

Although the current rules allow investment managers (fiduciaries) to consider climate-related risks, the letter explains that proposed rule "irrationally singles out climate-related risk for special treatment.” For example, the rule suggests the use of Form 5500 to require a benefit plan to report annually "how plan investment policy statements specifically address climate-related financial risk, whether service providers disclose or meet metrics related to such financial risks, and whether and how plans have factored climate-related financial risk into their analysis of individual investments or investment courses of action."

"Singling-out climate-related risk is unjustifiable," the letter continues. "Climate-related eventualities do not pose greater risk than, for example, technological disruption, economic downturns, domestic political changes, foreign conflicts, civic unrest, changing consumer tastes, non-climatic natural disasters, and public health crises such as the one ravaging the globe today."

Furthermore, the lawmakers claim that the rule prioritizes "speculative and immaterial risks."

"Predictions about the physical risks of climate change vary wildly, ranging from increasing numbers of hurricanes and wildfires to destruction from climate-driven great-power conflict or even more speculative claims," the letter argues, claiming that "predictive climate science is in its infancy."

But rather than protecting investors, the new rule would ultimately make them vulnerable to politically-motivated risks to their retirement funds.

"Fiduciaries should not be encouraged to consider or be protected from legal action for elevating immaterial or speculative risks when investing or offering investment options for employee retirement savings," the letter states. "At the very least, the Department should recognize in any proposed rulemaking that a plan fiduciary should not be required to treat climate-related risk differently than any other sort of risk."