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UPDATE 1-U.S. labor dept expected to say it will not enforce Trump-era investment rules -sources

Jessica DiNapoli
·2 min read

(Changes headline)

By Jessica DiNapoli

NEW YORK, Feb 18 (Reuters) - The U.S. Department of Labor isexpected to announce that it will not enforce Trumpadministration rules that curb investments based onenvironmental and social factors, and which limit shareholdervoting in corporate meetings, according to two people familiarwith the matter.

A department spokesman declined to comment on Thursday.

The rules, finalized in the last days of former PresidentDonald Trump's administration, affect trillions of dollars inretirement accounts. The business-friendly rules sparkedcriticism from investors who want companies to act on issuessuch as climate change and gender equality.

The rules are among the first of hundreds of Trump-erameasures that are being frozen or rescinded by President JoeBiden, who has put tackling climate change and social injusticeat the forefront of his policy agenda.

The Labor Department rules require that fund managers putretirees' financial interests first when allocating investments,rather than other concerns such as racial justice, and only voteon shareholder proposals when there is an economic reason to doso.

The department is expected to announce a review of bothmeasures, and not enforce them for the time being, the peoplesaid.

In a Jan. 20 executive order, Biden said the governmentshould review regulations that fail to the protect theenvironment. Overhauling the Trump-era rules would involve aprocess that can take months, the people said.

"That's a very sound decision on the part of the DOL," saidSanford Lewis, director of the Shareholder Rights Group, whichadvocates for investors. "I think it's appropriate for them toreconsider it and in the meantime not enforce it."

Shareholder calls for companies to develop plans for climatechange and disclose racial and pay data have won more investorbacking, prompting some companies to push back.

Sustainable investing advocates had been hoping that theBiden administration would quickly end rules that stifle theirability to pick stocks using environmental, social or governancefactors.

They have urged the Securities and Exchange Commission torevisit a similar Trump-era rule that raises the bar forsubmitting shareholder proposals.(Reporting by Jessica DiNapoli; editing by Michelle Price andRichard Chang)