By Katanga Johnson

WASHINGTON, (Reuters) –The U.S. Department of Labor proposed Wednesday a rule to replace two Trump-era policies that barred pension and retirement plans from taking into account climate change when selecting investments.

DOL’s proposal is currently subject to 60-day comment period. This follows a March announcement by the agency that it will not enforce its 2020 rules. The 2020 rules are meant to restrict investments based on social and environmental factors. They cover both shareholder voting and retirement accounts worth trillions.

Trump Administration officials claimed that rules placed investment managers in focus on the retirement interests of retirees and “material” risk to return, instead of possible political questions.

However, the Wednesday proposal of the agency responds to critics from investors and advocates who have encouraged companies to vote on corporate ballots for issues such as systemic racism and climate change. They also claim that Trump’s business-friendly measures were wrong.

This proposal is in response to a May Executive Order signed by President Joe Biden to direct federal officials to adopt policies to help protect American families against climate-related financial risks.

It would “bolster the resilience of workers’ retirement savings and pensions by removing the artificial impediments – and chilling effect on environmental, social and governance investments – caused by the prior administration’s rules,” said Ali Khawar, an acting assistant secretary at DOL.

“Climate changes and other ESG elements can be economically significant and, when they are considered, will undoubtedly lead to greater long-term risk-adjusted return.”

Lisa Woll (director of the Washington-based U.S. SIF, the Forum for Sustainable and Responsible Investment) applauded Wednesday’s proposal for recognizing proxy voting as an “ownership rights” and removing any restrictions that could have prevented fiduciaries exercising them as such.

“This proposal is intended to bridge the gaps between growth in sustainable investments overall and slower growth of retirement planning sustainable investing.