NH joins suit to fight move that tells 401K chiefs to put ESG front and center

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New Hampshire Attorney General John Formella (Courtesy photo)

CONCORD - The Attorney Generals Office announced on Friday that New Hampshire has joined a 25-state coalition lawsuit over a Department of Labor rule that would allow 401(k) managers to direct their clients' money to ESG (Environmental Social Governance) investments, which runs contrary to the laws outlined in the Employee Retirement Income Security Act of 1974 (ERISA).

The change would affect the retirement accounts of millions of people

"This action is all about protecting the hard-earned retirement savings of Granite Staters and of Americans all across the country," said Attorney General John Formella. "Asset managers should not have an automatic green light to just start directing trillions of U.S. retirement dollars into ESG investments without their clients' directing them to. That's exactly what they'll get starting next week if we don't stop this.

"Dollars and cents should be driving crucial and potentially risky investment decisions for people, and the policy objectives of an asset manager should not play a role. Federal law has long required fiduciaries to place their clients' financial interests at the forefront, and that is something that should not change."

The new rule, "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights," will take effect on Monday. Two-thirds of the U.S. population's retirement savings accounts would be affected, totaling $12 trillion in assets, according to the AG's statement.

Strict laws placed in ERISA are intended to protect retirement savings from unnecessary risk.

From the complaint: "[T]he 2022 Investment Duties Rule makes changes that authorize fiduciaries to consider and promote "nonpecuniary benefits" when making investment decisions. ... Contrary to Congress's clear intent, these changes make it easier for fiduciaries to act with mixed motives. They also make it harder for beneficiaries to police such conduct..."

About ESG

According to, ESG comprises the following themes

Environmental criteria, which examines how a business performs as a steward of our natural environment, focusing on:

  • waste and pollution
  • resource depletion
  • greenhouse gas emission
  • deforestation
  • climate change

Social criteria, which looks at how the company treats people, and concentrates on:

  • employee relations & diversity
  • working conditions, including child labor and slavery
  • local communities; seeks explicitly to fund projects or institutions that will serve poor and underserved communities globally
  • health and safety
  • conflict

Governance criteria, which examines how a corporation polices itself - how the company is governed, and focuses on:

  • tax strategy
  • executive remuneration
  • donations and political lobbying
  • corruption and bribery
  • board diversity and structure

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