Bipartisan Group of Lawmakers Introducing Bill to Kill Biden Admin's New Woke ESG Rule Targeting Retirement Accounts
Every Republican senator and Democratic Sen. Joe Manchin of West Virginia plan to introduce a resolution to roll back a new Biden administration rule that allows investment managers to prioritize ESG criteria over return on investment for retirement accounts.
GOP Sen. Mike Braun of Indiana is leading the effort in the Senate to use the Congressional Review Act to rescind the Department of Labor ESG rule, known as the 2022 Investment Duties Rule, which took effect on Monday after being announced late last year.
“In November, President Biden instituted a rule that explicitly permits [Employee Retirement Income Security Act] retirement plan fiduciaries to consider environmental, social, and corporate governance (ESG) factors when selecting investments and exercising shareholder rights,” Braun’s office said in a Wednesday news release.
“This Biden rule replaces a previous rule which mandated fiduciary decisions be made solely on getting the best returns for the 152 million American workers that depend upon ERISA for their retirement. Because ERISA covers most employer-sponsored retirement plans, we’re talking about $11.7 trillion in assets here.”
DEM AND @GOP SENATORS COME TOGETHER IN PUSH TO TAKE POLITICS OUT OF YOUR 401K. @SenatorBraun (R) & @Sen_JoeManchin (D) are two of the senators challenging @POTUS‘ new ESG rule which allows Wall Street to base retirement investments on issues other than profits…@BillHemmer pic.twitter.com/FzM61pt2JN
— America’s Newsroom (@AmericaNewsroom) February 2, 2023
Investopedia explained that the environmental component of ESG focuses on how corporations deal with issues such as pollution and climate change. The social portion has to do with company employee policies (including support of the LGBT agenda), and governance looks at such things as the diversity of the company’s board of directors.
Braun’s office noted that a number of studies have shown that ESG investing policies produce worse rates of return.
“For example, a study by UCLA and NYU found that over the past five years ESG funds underperformed the broader market, averaging a 6.3 percent return compared to 8.9 percent return respectively,” the news release said.
Allen Mendenhall, associate dean and professor in the Sorrell College of Business at Troy University, noted in an opinion piece for Fox News last year that assets have traditionally been placed where they are expected to “yield the most returns or on the basis of financial performance.”
But companies using ESG investing criteria “[use] their proxy power to strongarm companies at the board level.”
Braun tweeted Thursday, “President Biden is allowing fiduciaries to invest Americans’ retirement savings in funds with a lower return that support the progressive political agenda. Americans’ savings shouldn’t be politicized.”
President Biden is allowing fiduciaries to invest Americans’ retirement savings in funds with a lower return that support the progressive political agenda. Americans’ savings shouldn’t be politicized. https://t.co/QV4nOTYRDB
— Senator Mike Braun (@SenatorBraun) February 2, 2023
He told Fox Business Network, “All we’re saying is, don’t force the $12 trillion that is under management in 401(k)s to have to take into consideration or consider the woke agenda.”
Manchin tweeted, “At a time when our country is already facing economic uncertainty, record inflation and increasing energy costs, it is irresponsible of the Biden Administration to jeopardize retirement savings for more than 150 million Americans for purely political purposes.”
At a time when our country is already facing economic uncertainty, record inflation and increasing energy costs, it is irresponsible of the Biden Administration to jeopardize retirement savings for more than 150 million Americans for purely political purposes.
— Senator Joe Manchin (@Sen_JoeManchin) February 1, 2023
Under the Congressional Review Act, lawmakers can rescind major federal agency rules with a simple majority vote. However, the president must then sign the resolution for it to take effect. If the president vetoes it, Congress can then override the veto with a two-thirds vote in the House and the Senate.
GOP Rep. Andy Barr of Kentucky is leading the challenge to the ESG investing rule in the House.
Retirement accounts should be focused on helping people retire, not advancing a political agenda. Great to join @ainsleyearhardt to talk about this. #Fox&Friends pic.twitter.com/vJbs16EjU6
— Rep. Andy Barr (@RepAndyBarr) February 2, 2023
Dozens of conservative political groups have endorsed the Republican resolution, including Americans for Prosperity, Americans for Tax Reform, Concerned Women for America, FreedomWorks, Heartland Institute, Heritage Action, Independent Women’s Forum and Leadership Institute.
Twenty-five Republican attorneys general filed a lawsuit against the Biden administration last week seeking to block implementation of the ESG investing rule. The coalition of states is being led by Utah Attorney General Sean Reyes.
“The Biden Administration is promoting its climate change agenda by putting everyday people’s retirement money at risk,” Reyes said in a statement.
“Permitting asset managers to direct hard-working Americans’ money to ESG investments puts trillions of dollars of retirement savings at risk in exchange for someone else’s political agenda,” he added.
The complaint, filed on Jan. 26, states, “The 2022 Investment Duties Rule contravenes ERISA’s clear command that fiduciaries act with the sole motive of promoting the financial interests of plan participants and their beneficiaries.”
The attorneys general argue, “By formally injecting ESG concepts into the ERISA prudent duty regulations, DOL has ventured into territory that Congress explicitly rejected when it drafted ERISA.”
A version of this article originally appeared on Patriot Project.
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