On Jan. 26, 2023, twenty-four states sued the Department of Labor to block a new rule allowing retirement plans to consider environmental, social, and governance concepts (known as ESG) when administering plan assets.[1] The lawsuit, while notable for its potential impact on Employee Retirement Income Security Act regulations and the administration of retirement plans, may serve as a warning shot in the debate over ESG’s intersection with antitrust law.
ESG refers to a framework in which companies can consider environmental, social and governance issues as a potential measure of value. In practice, this might appear as actions to combat climate change, commitments to improving the community where the company is based or implementing corporate governance reforms. Many companies are now including ESG issues in their corporate disclosures, and investment firms are offering funds that invest based on ESG strategies.