Trump Administration Drops Rule Requiring Pension Funds to Consider Environmental, Social, and Governance Factors in Investment Decisions

In the evolving landscape of climate change policy, some states are taking up the fight as the federal government rolls back its green initiatives.

The Securities and Exchange Commission (SEC) is moving to abandon disclosure requirements, a decision that has prompted some companies to backtrack on their climate commitments. However, pressure is mounting on pension funds to take more account of climate change risks.

Two bills have been reintroduced in New York's senate to establish climate disclosure rules similar to California's. The specific details about the content of these bills and their current status are not provided. It's worth noting that a bill requiring greenhouse gas emissions disclosures was introduced in Colorado in January, but the date for its reintroduction is not specified.

The US president Donald Trump's administration plans to overturn a rule that allows pension funds to consider Environmental, Social, and Governance (ESG) factors when making investment decisions and exercising shareholder voting rights. This decision was met with resistance, as Biden issued a presidential veto to reject a Republican attempt to undo the ESG rule in Congress.

The Department of Labor also plans to abandon a rule implemented by the administration of former president Joe Biden that allowed pension funds to consider ESG factors and other "collateral benefits".

Despite Trump's hostility to ESG, some big pension funds are already taking more action on climate. For instance, the US and Canadian pension fund returns could fall up to 50% by 2040 if predictions for the worst global warming materialise and if the current approach to climate policy doesn't change, according to Ortec Finance.

Climate change is a growing threat to workers' retirement security, according to the Sierra Club. The organisation highlights that the impacts and consequences of bills like those in New York and Colorado, if passed, are not yet clear.

It's also worth mentioning that a coalition of Republican-led states had challenged the ESG rule during the previous administration. The specific states involved are not named in the available information.

As the debate continues, it's clear that the intersection of climate change and pension funds is a complex and pressing issue. This article was last updated on June 6, 2025.