The ESG backlash continued Monday with Senator Steve Daines, R-Mont., introducing a bill to protect retirement savers from “the woke mob” and investment companies that act as “pop-up shops for the radical left.”
More specifically, the bill would prevent “financial institutions from prioritizing extraneous factors like environmental, social [and] governance over the security of workers’ retirement savings.”
The “Securing Employee Retirement Returns Act” is a response to President Biden’s May 2021 Executive Order on Climate-Related Financial Risk. Among other things, the EO directed the Secretary of Labor to identify agency actions to take under ERISA “to protect savings and pensions of US workers from the threats of climate-related financial risk.”
It also instructed the Secretary to consider suspending Trump-era fiduciary rules under ERISA that prioritized pecuniary factors over non-pecuniary ones.
“Montanans should not have to pay the price for the whims of wokeness with their hard-earned life savings. Fiduciaries must remember their responsibility is to their shareholders, not the woke mob – these are financial institutions, not pop-up shops for the radical Left,” Daines said.
Daines’ bill would codify the Trump Administration Department of Labor rules for fiduciaries under the Employee Retirement Income Security Act (ERISA).
Morningstar figures show that assets in ESG and sustainable funds reached almost $4 trillion in 2021, although demand has waned somewhat in the wake of Russia’s invasion of Ukraine.
Some high-profile investors and politicians have spoken out against ESG recently, fueling a backlash against the popular investment strategy.
Former Vice President Mike Pence called for states with large employee pension funds to “rein in” massive investment firms and their ESG activity.
Billionaires Peter Thiel, Elon Musk, and Charlie Munger have each recently criticized ESG, and both The Wall Street Journal and The New York Times published pieces noting the political blowback from Republicans.
Over the weekend, the Journal’s Andy Kessler published an analysis of BlackRock’s ESG Aware MSCI USA ETF, noting it has almost the same top holdings as its S&P 500 ETF.
“BlackRock charges five times as much for juggling a few names and slapping ESG on the name,” Kessler wrote. “As of June 30, ESG Aware was down 23.7% vs. down 20% for the S&P 500 index.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
