A group of Republican senators are urging the U.S. Department of Labor (DOL) to withdraw a recent proposal that allows asset managers to promote environmental, social, and governance (ESG) objectives in retirement plans.
“[T]he proposal effectively mandates consideration of climate change and ESG factors in all investment and proxy voting decisions. In addition, the proposal vastly expands the circumstances in which retirement plan fiduciaries can pursue ‘woke’ ESG causes even when they provide no financial benefits to plan participants and beneficiaries. As a result, it will significantly harm Americans’ retirement savings by allowing plan fiduciaries to promote non-pecuniary policy objectives like lowering global carbon emissions and promoting ‘social justice’ rather than being solely focused on maximizing investment returns,” the Republican senators wrote to Labor Secretary Martin Walsh on Dec. 10.
The letter was signed by U.S. Senate Banking Committee Ranking Member Pat Toomey (R-PA), U.S. Senate Finance Committee Ranking Member Mike Crapo (R-ID), U.S. Senate Health, Education, Labor and Pensions (HELP) Committee Ranking Member Richard Burr (R-NC), and U.S. Senate Aging Committee Ranking Member Tim Scott (R-SC).
“Given the wide divergence of views within the investment community as to whether ESG
investing outperforms conventional investing, the need for clear guidance to ERISA plan
fiduciaries is of great importance. The proposal, by reminding plan fiduciaries of their potential liability under ERISA, but remaining ambiguous as to whether and when it is appropriate to incorporate ESG factors, or indeed when ESG investing is to be a mandatory investment strategy, fails immeasurably on that score,” the senators wrote.