In one of the latest developments in the Biden administration’s recent initiatives to strengthen environmental, social, and governance (ESG) efforts in the United States, the U. S. Department of Labor (DOL) announced last week that it would not enforce a final rule requiring fiduciaries subject to ERISA to evaluate investment opportunities based upon financial performance factors, rather than ESG metrics. The DOL stated that the final rule “created a perception that fiduciaries are at risk if they include any environmental, social and governance factors in the financial evaluation of plan investments.”

Shortly before President Biden took office, we noted that it seemed likely his administration would take such steps. The DOL’s decision comes on the heels of the Securities and Exchange Commission’s announcement earlier this month about the formation of a new ESG task force in its division of enforcement, further underscoring the administration’s apparent commitment to increase ESG accountability.