Biden admin risks Americans' retirement accounts to push climate agenda, GOP leaders in 24 states warn

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FIRST ON FOX: Attorneys general and treasurers from 24 states urged the Biden administration to drop a proposed regulation that would require retirement investment managers to prioritize climate change concerns while managing American employees' retirement portfolios.

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," the state leaders wrote in the letter, first provided to FOX Business. "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."

Utah Republican officials – Attorney General Sean Reyes, Treasurer Marlo Oaks, and State Auditor John Dougall – led the letter, which Republican officials from Alabama, Alaska, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, Texas, West Virginia and Wyoming joined.

President Joe Biden and the White House COVID-19 Response Team participate in a virtual call with the National Governors Association from the South Court Auditorium of the Eisenhower Executive Office Building of the White House Complex on Monday, Dec (Kent Nishimura / Los Angeles Times via Getty Images / Getty Images)

The letter notes that the Employee Retirement Income Security Act's (ERISA) rules bar fiduciaries – entities entrusted with employee retirement funds – from subordinating "the interests of retirement plan participants and beneficiaries to unrelated or other objectives."

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The DOL's proposed rule implements an executive order President Biden signed on May 20, 2021, which directed 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."

Sean Reyes, attorney general of Utah, speaks during the Conservative Political Action Conference (CPAC) in Orlando, Florida, U.S., on Thursday, Feb. 24, 2022.  (Tristan Wheelock/Bloomberg via Getty Images / Getty Images)

While current rules allow fiduciaries to consider climate-related risk, the proposed rule "irrationally singles out climate-related risk for special treatment," the letter claims. For instance, 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 states. "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." The letter cites the disruption from Russia's invasion of Ukraine.

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The letter claims that the rule prioritizes "speculative and immaterial risks."

Documents about Individual retirement account IRA on a desk. (iStock)

"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."

Rather than protecting investors, this rule would make them vulnerable to politically-motivated risks to their retirement funds, the letter warns.

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"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."

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