House Republicans continue pushback against ESG considerations in retirement plans (2023)
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House Republicans again pushed back on the Biden administration’s rule allowing ESG considerations in investments governed by the Employee Retirement Income Security Act of 1974 (ERISA). The House Ways and Means Committee held a hearing on the matter on November 7:
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"This committee has a duty to ensure that our tax rules support Americans' financial security," said Rep. Jason Smith, R-Mo., chair of the Ways and Means Committee, during a Nov. 7 hearing titled "Ensuring 'Woke' Doesn't Leave Americans Broke." … Most of the witnesses Republicans called to testify at the hearing felt similarly to Smith, including Utah State Treasurer Marlo Oaks, who referred to ESG as a dangerous investment scheme. "ESG has created an uncontrollable impulse to pressure corporations to solve complex global and societal issues," Oaks said. "These issues, such as climate, income inequality, guns and abortion to name just a few, should be in the purview of a democratically elected government. ESG hijacks corporate governance to advance ideological objectives often divorced from and often detrimental to long-term shareholder value."[1] |
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The Republicans on the committee released a statement after the hearing arguing that, in their view, opposing ESG is important for maximizing retirement savings:
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At a Ways and Means hearing exploring the infiltration of ESG (environmental, social, and governance) ideology into America’s financial system, witnesses exposed how the Biden Administration’s climate alarmism is allowing ESG activists to threaten the $33 trillion Americans have saved in pensions, annuities, IRAs and 401(k) plans. Increasingly common and pervasive ESG mandates are forcing seniors and savers to pay more in management fees, while earning less. Over the past year, according to a Ways & Means Committee staff analysis, the 20 largest ESG funds lost money and performed nearly 19 percentage points worse than the benchmark S&P 500 index. Despite ESG’s poor financial performance, the Biden Administration created a pro-ESG rule in 2022, opening the door for asset managers to invest retirement savings in pursuit of climate goals instead of a secure retirement for their clients. During the hearing, the Committee heard how this move has financially benefited countries such as China and Iran, will hurt family farmers, and shift America’s financial systems from one focused on maximizing returns to instead financing radical climate goals. Americans expect and are legally entitled to have their retirement savings invested for maximum financial returns. ESG funds have a track record of delivering lower returns and costing more to manage.[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
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