H.J. Res. 30, Providing for Congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Department of Labor relating to "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights"

H.J. Res. 30 would disapprove the final rule “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” which was submitted by the Department of Labor (DOL) and published in the Federal Register on December 1, 2022. The rule became effective on January 30, 2023. The resolution would invoke a legislative process established by the Congressional Review Act, which would repeal the final rule and prohibit DOL from issuing the same or a similar rule in the future.

Background

Under the Employee Retirement Income Security Act of 1974, fiduciaries of private pension plans must act in the interest of plan participants, including when making investment decisions. The rule “Financial Factors in Selecting Plan Investments,” issued on November 13, 2020, required fiduciaries to make investment decisions based solely on “pecuniary factors.” That rule included a “tiebreaker” standard, under which fiduciaries could consider other benefits when “alternative investment options are economically indistinguishable.”

The 2022 rule clarified how plan fiduciaries may consider climate change and other environmental, social, or governance (commonly referred to as ESG) factors when making investment decisions. Under the new regulation, fiduciaries may consider “the economic effects of climate change and other environmental, social, or governance factors,” but investment decisions “may not subordinate the interests of the participants and beneficiaries in their retirement income or financial benefits under the plan to other objectives, and may not sacrifice investment return or take on additional investment risk.”