65 Fall 2026 ERISA and Retirement Funds ERISA is one of the strongest lines of defense against divestment from Israel. Adopted in 1974, the law regulates retirement funds, which represent a large proportion of institutional investment, in the tens of trillions of dollars.11 The three biggest retirement fund investors, Blackrock, Vanguard, and State Street, own over 20% of U.S. markets,12 making their influence hard to overstate.13 One key phrase in ERISA is critical to preventing divestment from Israel, and the politicization of investment more generally: retirement fund trustees must make investment decisions “solely in the interests of participants and beneficiaries and for the exclusive purpose of providing benefits.”14 The meaning of this clause has been debated for decades, with some arguing that it requires trustees to maximize returns, while others argue that they may consider broader interests, under limited circumstances.15 Through administrative bulletins published by the Department of Labor, each presidential administration has altered the degree to which it would enforce that provision of ERISA.16 For the first time in 1994, the Clinton Administration allowed fund trustees to consider environmental, social, and governance (“ESG”) factors in their investing decisions.17 However, trustees could only favor socially conscious investments when deciding between investments of equal value. In practice, they could not make decisions based exclusively on ESG factors, but they could break a tie between two investments with equal expected returns by choosing the one that appeared to be more socially responsible. Over the course of the Bush, Obama, Trump, and Biden administrations, ERISA has been broadened and narrowed along political lines. Democratic presidents have expanded its reach to allow for more consideration of the social impacts of investments, while Republican administrations work to limit that ability.18 Now, the use of social considerations in investing decisions may be narrowed again, maybe even more substantially than ever. The Trump Administration announced in May 2025 that it would repeal the Biden Administration’s looser interpretation and discourage environmental, social, and governance considerations in investment.19 That planned change was reaffirmed by the Department of Labor in September.20 In fact, Congressional Republicans are attempting to codify a strict interpretation of ERISA to prevent future Democratic administrations from relaxing the rules again.21 H.R. 2988, which moved out of committee in June 2025, would prevent fund trustees from considering any factors other than maximizing potential returns.22 This bill passed the House by a vote of 213-205 on January 16, 2026, and was received by the Senate shortly thereafter. It is now in the hands of the Senate Committee on Health, Education, Labor and Pensions. A decision to divest from (or avoid investing in) Israeli businesses based on political considerations would run afoul of any interpretation of ERISA to date.23 Even under broader interpretations of the rule, the Department of Labor’s 11. Employee Retirement Income Security Act (ERISA), available at https://www.dol.gov/general/topic/retirement/erisa; Matt Cole (Strive Asset Management), “Fiduciary Duties of Public Pension Systems and Registered Investment Advisors,” HARV. L. SCH. F. ON CORP. GOVERNANCE (Mar. 1, 2023), available at https://corpgov.law.harvard. edu/2023/03/01/fiduciary-duties-of-public-pension-systems-and-registered-investment-advisors/ 12. Cole, ibid. 13. Barzuza, Curtis & Webber, supra note 5, at 1280. 14. 29 U.S.C. § 1104(a)(1)(A)(i). 15. Marjorie Glover & Joseph Denker, “Pension plans pressured over ESG investments” (Aug. 19, 2020), available at https://www.projectfinance.law/publications/2020/august/pension-plans-pressured-over-esg-investments/ 16. Id.; Webber, “The Use and Abuse of Labor’s Capital,” supra note 5, at 2124; David H. Webber, “Rethinking ‘Political’ Considerations in Investment,” 46 DEL. J. CORP. L. 3, 22 (2021). 17. Glover & Denker, supra note 15. 18. Id. 19. Elizabeth S. Goldberg & Rachel Mann, “Fall 2025 ESG Investing Quarterly Update” (Oct. 16, 2025), available at https://www.morganlewis.com/pubs/2025/10/fall-2025-esg-investing-quarterly-update 20. Id. 21. Id. 22. Protecting Prudent Investment of Retirement Savings Act, H.R. 2988, 119th Cong. § 1002 (2025). 23. Webber, “The Use and Abuse of Labor’s Capital,” supra note 5, at 2122; Webber, “Rethinking ‘Political’ Considerations in Investment,” supra note 16.
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