Ceres and American Retirement Association urge court to uphold a U.S. Department of Labor rule ensuring fiduciaries can consider all financial risks

BOSTON—Ceres and the American Retirement Association (ARA) filed an amicus brief yesterday in the Fifth Circuit Court of Appeals supporting the U.S. Department of Labor’s (DOL) rule that ensures retirement plan fiduciaries, including 401k sponsors, can consider all relevant factors, when making investment decisions. The full brief is available here. 

The DOL rule, Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights, took effect in January 2023 and immediately faced a legal challenge in the Northern District of Texas. The court ruled in favor of upholding the rule, citing its alignment with decades of legal precedent and prior DOL rulemakings. The decision was appealed in the Fifth Circuit where it is now under consideration. 

“Any attempt to limit the risk and return factors that retirement professionals can consider when making investment decisions puts the lifesavings of millions at risk,” said Steven Rothstein, managing director of the Ceres Accelerator for Sustainable Capital Markets at Ceres. “This rule, as the district court concluded, takes a neutral, middle-of-the-road approach to the consideration of environmental, social, and governance factors. We hope the appeals court will agree with the lower court and leave it in the capable hands of fiduciaries to determine which risk and opportunity factors to assess.”  

“For 50 years ERISA has required plan fiduciaries to make investment decisions solely in the best interest of plan participants,” said Brian Graff, CEO of the American Retirement Association. “We believe the Department’s regulation should be upheld because it takes a neutral approach giving plans fiduciaries the discretion to determine which financial factors are relevant when making investment decisions while ensuring that the financial interests of plan participants always remain paramount.” 

Ceres, in collaboration with US SIF and the Environmental Defense Fund, conducted an analysis of comments submitted during the DOL’s rulemaking process in January 2022, which demonstrated overwhelming support for the new rule, including from financial industry commenters. 

About Ceres 

Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. The Ceres Accelerator for Sustainable Capital Markets is a center of excellence within Ceres that aims to transform the practices and policies that govern capital markets to reduce the worst financial impacts of the climate crisis. It spurs action on climate change as a systemic financial risk—driving the large-scale behavior and systems change needed to achieve a net zero emissions economy through key financial actors including investors, banks, and insurers. The Ceres Accelerator also works with corporate boards of directors on improving governance of climate change and other sustainability issues. For more information, visit ceres.org and ceres.org/accelerator and follow @CeresNews. 

About American Retirement Association 

The American Retirement Association, based in the Washington, D.C. area, is a non-profit professional organization established to educate all retirement plan and benefits professionals who are dedicated to building a better retirement for Americans and to create a framework of policy that gives every working American the ability to have a comfortable retirement.  The American Retirement Association is comprised of five premier retirement industry associations: the American Society of Pension Professionals & Actuaries (ASPPA), the American Society of Enrolled Actuaries (ASEA), the National Association of Plan Advisors (NAPA), the National Tax-deferred Savings Association (NTSA), and the Plan Sponsor Council of America (PSCA). For more information, visit www.usaretirement.org.