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For the average middle-class American, your retirement account may unknowingly support liberal causes such as climate alarmism and racial hiring quotas. This is all thanks to a concept called “ESG,” which stands for environmental, social, and corporate governance.
ESG is essentially a disguise for liberal activism under the guise of corporate responsibility. However, it has negative implications for both businesses and your retirement account.
Wealthy progressives have been exerting their influence on powerful American companies, urging them to adopt ESG investing standards. These standards aim to bring about social change within corporations that Democrats cannot achieve through Congress.
Pedestrians pass the New York Stock Exchange, May 5, 2022, in Manhattan.
(AP Photo/John Minchillo, File)
The “E” in ESG encourages investment funds to support green energy initiatives, while the “S” and “G” promote diversity-based hiring and donation to left-wing groups. Unfortunately, this means that your retirement account is exposed to financial risks associated with these social experiments.
THE WAR IN CORPORATE AMERICA BETWEEN FAITHFUL INVESTING AND WOKE INVESTING
Last year, energy was the only sector in the Standard and Poor’s 500 stock index to experience growth. However, ESG-aligned funds avoided investing in fossil fuel companies, causing them to underperform compared to the S&P 500. These ESG companies prioritized progressivism over profitability, ultimately hurting their own investors.
Even worse, the largest ESG firms in America may be violating antitrust laws by disadvantaging the fossil fuel industry in terms of investment. Attorneys general across the country are currently investigating these ESG companies for antitrust violations and warning about the associated financial risks.
Major law firms such as Latham & Watkins, Baker McKenzie, and Hogan Lovells have already cautioned their clients about the antitrust risks associated with the ESG movement. Even President Biden’s FTC chair and assistant attorney general for the antitrust division have acknowledged the potential antitrust violations committed by ESG companies.
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Governors and state legislatures in various states have begun divesting retirement and pension funds from ESG-promoting firms like BlackRock, resulting in significant financial losses for these companies. States cannot afford to put taxpayer dollars at risk by investing in companies involved in antitrust lawsuits, nor can they risk jeopardizing state-backed retirement and pension funds due to liberal ideals.
The leaders of these woke firms will eventually face the consequences of their actions in the market. Unfortunately, regular Americans who had no say in or approval of these choices will suffer the consequences as well. This is unfair, which is why we introduced the Ensuring Sound Guidance (ESG) Act.
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The ESG Act mandates that asset managers and ERISA plan sponsors obtain written permission from their customers before considering non-financial interests in their investments. Unless the customer agrees to activist investing, the ESG Act will require investment strategies to prioritize sound financial practices, aiming to maximize returns and minimize risks. This legislation prevents liberals from using Americans’ retirement funds to advance their political goals without their knowledge and consent.
If investors willingly choose to support left-wing priorities with their money, that’s their prerogative. However, it’s egregious to utilize the retirement and college savings of hardworking Americans to pursue a political agenda without their consent. Our legislation preserves investor choice while limiting exposure to left-wing activism.
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Rep. Andy Barr has represented Kentucky as a Republican in the United States House since 2013.
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