Bipartisan legislation introduced Wednesday aims to block a rule by the Biden administration which allows retirement plan fiduciaries to make investment decisions based on ESG factors.
“Environmental, social, and governance (ESG)” is a form of grading companies and countries — and soon people, experts warn — based on how well they conform to utopian ideology on environmental and social issues. For example, the more “environmentally friendly” or “racially inclusive” a company purports to be, the more virtuous it is and thus more worthy of investment. If a company’s ESG score is below certain thresholds, they are not to be invested in at all.
A new rule by the Labor Department now allows fiduciaries to factor in ESG when investing retirement savings, though it still requires them to keep their fiduciary duty to plan participants. The rule is a reversal of a Trump-era policy which forbade fiduciaries from making “non-pecuniary” decisions which didn’t directly benefit participants.
The rule went into effect Monday despite a lawsuit by 25 states to block the rule which would affect 152 million Americans, according to the state attorneys general.
Now half the country is again challenging the rule, this time in the form of a joint resolution of disapproval introduced Wednesday by all Republican senators and Sen. Joe Manchin (D-WV). If the resolution passes, it will allow Congress to override the Biden administration and kill the rule.
The lawsuit and legislation are part of a recent and widespread onslaught against the ESG narrative. Florida Governor Ron DeSantis signed a measure last month preventing fiduciaries from mixing in ESG with investments, which the resolution called a “perversion of financial investment priorities under the euphemistic banners of environmental, social, and corporate governance and diversity, inclusion, and equity.”
Billionaire Elon Musk recently quipped that the “S” in ESG stands for “Satanic”. The Twitter CEO also called it a “scam” that has been “weaponized by phony social justice warriors.”
Earlier this year, Kentucky State Treasurer Allison Ball ordered state agencies to divest from companies engaged in boycotts against the energy sector for their low ESG score. The “restricted financial institutions” included investment giants BlackRock and JP Morgan Chase.
BlackRock CEO Larry Fink, who heads one of the world’s largest investment firms and manages roughly $8 trillion, was candid about how the company approaches ESG.
“You have to force behaviors, and at BlackRock, we’re forcing behaviors,” said Fink in 2017.
Last year, Republican states pulled a total of $11.7 billion in investments from BlackRock over the company’s commitment to ESG. Florida, Texas, South Carolina, Louisiana, Missouri, West Virginia and Utah all divested from the corporation.
In October, 19 attorneys general in conservative states launched an investigation into America’s six largest banks that are heavily involved in ESG.
The attorneys general served civil investigative demands to Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo, all of whom are involved with the United Nations’ Net-Zero Banking Alliance. The project’s aim is that by 2050, the world’s largest banks will include only ESG-compliant companies in their investment and lending portfolios; that is, the world’s largest banks will commit to exclusively investing in or lending to companies which are “environmentally friendly”.
A week prior to the investigation, BlackRock was downgraded by investment banking firm UBS analyst Brennan Hawken, who slashed estimations of the company’s target stock price from $700 to $585 and changed its rating from Buy to Neutral.
“We are downgrading BLK to Neutral based on environmental pressure to earnings and risk from the firm’s ESG positioning,” Hawken said.
At an October investor seminar, even JP Morgan Chase CEO Dimon admitted that “some investors don’t give a s***” about ESG and blasted company executives for “ceding governance to do-gooder kids on a committee” based on their compliance with ESG.