Republican Congressman French Hill from Arkansas’s Second District introduced a bill in late July aimed at stopping the Securities and Exchange Commission from finalizing the proposed rule titled “The Enhancement and Standardization of Climate-Related Disclosures for Investors.”
Specifically, the language of the brief bill states that the SEC may not finalize the proposed rule or implement or enforce such a finalized rule or any substantially similar rule.
The SEC’s proposal, released in March, would require public companies to disclose risks related to climate change and their greenhouse gas emissions in their official filings, such as annual and semi-annual reports.
While Congressman Hill’s bill has little chance of advancing, it’s part of a wider effort recently by critics of environmental, social, and governance (ESG) investment strategies to push back on what they see as the over-politicization by Wall Street and state governments of pensions and similar retirement plans.
Florida Republican governor and possible presidential candidate Ron DeSantis announced that he is “taking a stand against woke CEOs and will work with the state’s legislature to ban ESG considerations when investing state funds.
University of Chicago researchers analyzed Morningstar data, finding high flows but poor performance in those with supposedly solid sustainability ratings.
BlackRock, the world’s largest asset manager, recently tempered its ESG enthusiasm in the wake of higher inflation and gas prices. High-profile investors and entrepreneurs Peter Thiel, Elon Musk, and Charlie Munger criticized ESG. Former Vice President Mike Pence said states should “rein in” ESG inclusion efforts in public pension funds.”
David Blanchett, the high-profile Managing Director and Head of Retirement Research with PGIM DC Solutions, recently found that “only 8.9% of new DC participants allocated to an ESG fund, and the average allocation to ESG funds among those who held at least one ESG fund was 18.7% of their total balance. The average allocation to ESG funds among all DIY participants included in the analysis was 1.7%.”
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.
