Biden’s ESG rule is ‘dangerous’ and ‘bad’ for US economy: Rep. Claudia Tenney
Rep. Claudia Tenney, R-N.Y., discusses the crisis at the northern border, the Senate blocking Biden’s ESG investment rule and the GOP pressuring the Biden administration to sanction Iran.
Progressive Democrats pushing the ESG (environmental, social and governance) agenda are focused on controlling the private decisions and beliefs of millions of Americans. Worse, they are increasingly willing to lie about what ESG is in order to gaslight Americans into compliance, or at least apathy toward this massive scheme.
Take Senate Majority Leader Chuck Schumer, D-N.Y., who recently penned a Wall Street Journal op-ed with this headline, "Republicans Ought to Be All for ESG."
Schumer was expressing his support for a recent Labor Department rule allowing retirement fund managers to use workers’ savings to advance leftist political goals. Before rounding on Republicans, though, Schumer should check with his own party. As Senator Joe Manchin’s (D-WV) website states – "the Biden Administration’s ESG rule . . . prioritizes politics over getting the best returns for millions of Americans’ retirement investments."
Obviously, that’s a terrible idea.
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So, House Republicans have passed a bill to nullify the rule which subsequently passed the Senate on a bipartisan basis. President Biden will likely veto it. Why?
Well, Schumer deceptively claims that Republican opposition to this ESG is really an attack on "free markets." Rest assured – Schumer knows this argument is false. Whether the effort to nullify this ESG rule succeeds or fails, investors will be free to invest their own monies in any manner they choose, to support any cause they choose, or simply to generate a return. The bipartisan effort to nullify the rule would only prevent progressives from conscripting other peoples’ money to advance their leftist political goals.
Democrats also claim their ESG rule is necessary to clarify a Trump-era rule dealing with ESG investing under the Employee Retirement Income Security Act (ERISA). The Trump rule confirmed ERISA’s mandate that those managing retirement assets must do so "for the exclusive purpose" of providing financial benefits to retirees. Explaining the Trump rule, Labor Secretary Scalia wrote that "[a] fiduciary's duty is to retirees alone, because under ERISA one 'social' goal trumps all others—retirement security for American workers." Sounds right.
But according to Biden’s Labor Department, the Trump rule had a "chilling effect" on consideration of "environmental, social and governance factors in investments." Well, yes, it would, but only for those ESG investments that were made for a purpose other than maximizing returns for retirees. The Trump rule already permits consideration of ESG factors as long the sole focus remains on maximizing those returns – as ERISA requires. So, why do Democrats want a new rule?
Let’s say a fund manager believed a solar panel manufacturer was going to generate superior returns given government subsidies and the demand for so-called "green energy." Under either the Trump or Biden rule, investing in that company would be perfectly acceptable irrespective of any ESG benefits simply because it is believed to be a good investment.
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What if the company’s financial prospects were meager? Under the Biden rule consideration of the company’s supposed environmental benefits would be permissible and could potentially tip the scale in favor of investing in an underperforming company. Under the Trump rule, it would be an impermissible investment because investing in an underperforming company to advance the E in ESG would violate ERISA’s requirement that investments must actually maximize returns for retirees.
What about the exercise of shareholder rights, such as proxy voting, which fund managers often do on behalf of the retirees whose monies they invest. As Biden’s former Labor Secretary Marty Walsh stated, the Biden rule would allow retirement fund managers to consider "environmental, social and governance factors when they . . . exercise shareholder rights, such as proxy voting."
Let’s say that fund manager invested in a profitable solar panel manufacturer but nonetheless believed that the benefits of solar power were outweighed by the detrimental environmental impact of producing, placing, and disposing of solar panels. So, rather than encouraging management to increase its profitable solar panel production, the fund manager used its proxy voting power to elect directors who supported imposing a "net zero solar by 2050" policy on the company, potentially protecting the environment but obviously reducing returns for the retirees whose funds were used to purchase this company’s stock.
As absurd as that sounds, it is essentially what happened to Exxon Mobile Corp. In 2021, BlackRock and Vanguard, our nation’s largest retirement fund managers, successfully helped elect directors nominated by an environmentalist hedge fund to Exxon’s board. In January 2022, Exxon – our nation’s largest and most profitable oil company – adopted a "net zero carbon by 2050" policy.
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So, the biggest oil company in the world is now supporting a severe reduction in the very product that justifies its existence. That’s ESG investing in a nutshell – wealthy and largely unaccountable fund managers pursuing a progressive political agenda, regardless of the financial impact on the retirees whose monies they are investing.
Sen. Joe Manchin, D-W.Va., is right. The Biden rule is "just another example of how [the Biden] Administration prioritizes a liberal policy agenda over protecting and growing the retirement accounts of 150 million Americans that will be in jeopardy."
If the Democrats want to remake America, they can try their luck at the ballot box – and leave our nation’s retirees’ hard-earned assets alone.
Andy Puzder was chief executive officer of CKE Restaurants for more than 16 years, following a career as an attorney. He is currently the Chairman of 2ndVote Advisers, a Senior Visiting Fellow at the Heritage Foundation, and a Senior Fellow at both the Pepperdine University School of Public Policy and the America First Policy Institute. He was nominated by President Donald Trump to serve as U.S. Labor Secretary.
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