EBSA Leader Targets ESG And DEI In Enforcement Efforts

Daniel Aronowitz, the top official for the Employee Benefits Security Administration (EBSA), a division of the U.S. Department of Labor, recently spoke at a national trade group’s conference about EBSA priorities. He unveiled EBSA’s new concentration on enforcing federal regulations and laws against benefit plan managers, including those focused on investment goals related to environmental or diversity concerns. 

According to Aronowitz, EBSA may target employee benefit plan managers who, in making investment decisions, pursue environmental, social, and governance (ESG) factors or support diversity, equity, and inclusion (DEI) initiatives as a breach of the duty of loyalty under the Employee Retirement Income Security Act (ERISA). Aronowitz lumped ESG and DEI investment decisions in with individuals and entities acting in “bad faith” and “misappropriating assets set aside for the benefit of the American worker,” branding those actions as “disloyal.” 

Aronowitz also criticized EBSA’s prior efforts, characterizing them as creating an “extra regulatory dragnet.” He also pointed out EBSA’s submission of various amicus briefs filed in support of employers’ position in some appellate cases, including ERISA claims involving Home Depot, Lockheed Martin, and Parker-Hannifin Corp. Nonetheless, he stated that EBSA was neither “pro business,” “pro plan sponsor,” nor “pro participant.” Instead, he emphasized that EBSA would work to “derail litigation abuse” and “restore ERISA’s neutrality.”