The Employee Benefits Security Administration (EBSA), part of the Department of Labor, submitted a proposed rule to the Office of Information and Regulatory Affairs (OIRA) on June 30, 2026. The proposed rule would restrict plan fiduciaries from prioritizing environmental, social, and governance (ESG) and diversity, equity, and inclusion (DEI) factors when selecting investments and exercising shareholder rights, reversing Biden-era guidance that permitted such considerations alongside financial metrics.
The EBSA drafted the rule in response to a February 2025 executive order from President Donald Trump (R) directing federal agencies to review regulations that exceed statutory authority or implicate matters of social, political, or economic significance without clear congressional authority.
The proposed rule would replace guidance the Biden administration issued on ESG investing within ERISA retirement plans — 401(k)s, pension plans and similar accounts covering millions of workers.
The regulatory change reflects the Trump administration's broader effort to restrict ESG and diversity, equity, and inclusion (DEI) considerations across federal policy. In December 2025, Trump signed an executive order directing the Securities and Exchange Commission (SEC) to review and potentially rescind regulations on proxy advisors who prioritize ESG and DEI initiatives. The administration has also increased scrutiny of Labor Department fiduciaries' use of proxy advisors.
The House of Representatives passed legislation on January 15 with similar aims, requiring financial institutions and advisors to base investment decisions solely on economic factors, excluding political or social impacts. The Senate has not advanced the measure.
ERISA governs approximately 670,000 retirement plans covering roughly 90 million workers and retirees.
The Trump administration issued an ESG rule in 2020 that restricted plan fiduciaries from considering environmental and social factors in investment decisions. The Biden administration abandoned that rule in 2021 and issued a rule permitting fiduciaries to consider ESG factors alongside financial metrics. The current proposed rule reverses the Biden approach.
In December 2025, the Department of Labor announced it would revise its ESG guidance following Trump's return to office. The agency did not disclose the rule's specific contents before submission to OIRA.
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.
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