The Department of Labor (DOL) announced Sept. 4 that it plans to issue a new rule governing the use of environmental, social, and governance (ESG) factors in retirement plans covered by the Employee Retirement Income Security Act of 1974 (ERISA). The department’s Employee Benefits Security Administration listed the issue in its semi-annual regulatory agenda as being in the Final Rule Stage.

Why does it matter?

The DOL’s position on ESG investing in retirement plans has shifted between administrations. The Trump administration in 2020 issued the Financial Factors in Selecting Plan Investments rule, which explicitly prohibited fiduciaries from considering ESG factors. The Biden administration replaced that rule with the Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights rule, which permitted ESG considerations. In May 2025, the second Trump administration announced it would no longer defend the Biden rule in the Fifth U.S. Circuit Court of Appeals. 

Legal analysts expect the new Trump rule will go through a full notice-and-comment process, even though it is listed in the Final Rule Stage.

What’s the background?

Title I of ERISA governs private-sector employee benefit plans and establishes standards for fiduciary responsibilities. The Department of Labor issued Interpretive Bulletin 94-1 in 1994, requiring fiduciaries to prioritize financial returns and material risk factors in their investment decisions. Between 1994 and 2020, the department issued several more guidance documents, all requiring the prioritization of financial returns and risk mitigation factors in investment decisions but not prohibiting certain ESG investment considerations.

Ballotpedia tracks support for and opposition to the environmental, social, and corporate governance (ESG) investing movement. To learn more about arguments for, against, and about ESG, click here. For more information on reform proposals related to ESG policy, click here.