Keep politics out of Americans' retirement plans

The federal government is going too far when it wants to be involved in the retirement plan investing of American citizens.

The federal government wants to continue to permit retirement plan fiduciaries, such as 401k plan sponsors, to consider climate change and other ESG factors when they select investment options and exercise shareholder rights.

ESG stands for environmental, social and corporate governance investing that takes into account some other non-financial information about a company, too, such as staff diversity and the presence of minorities in staffing. 

Depending on a given investor or policy, ESG also reportedly can take into account a wide range of other business practices, such as the release of carbon emissions or pollution and “the treatment’’ of employees.

Last year, the federal government, through the Department of Labor released the new rule to allow asset managers to prioritize ESG factors over the best financial returns for the retirement accounts of 150 million American workers.

The Employee Retirement Income Security Act of 1974 (ERISA) covers most employer-sponsored retirement plans, and the Employee Benefits Security Administration within the DOL  is responsible for enforcing rules on how these retirement plans are invested.

Congress is now fighting back with a resolution to express disapproval and nullify the rule. President Joe Biden says he will veto the resolution, as he continues to put politics ahead of what is best for American citizens.

Investment firms and asset managers should have one goal and one goal only: make the most money possible for their investors through investments in reputable companies. That’s it.

American citizens certainly do not need the U.S. government to interfere with their individual retirement investment strategies. In fact, it’s likely unconstitutional for the government to promote any investment opportunity over another. That is not the government’s role.

In a free country, we do not need the federal government to be the proclaimed authority on ESG factors. There are other ways already that we can find out this kind of information.

If American citizens want to consider ESG factors when investing, they can do that, if they want to.

But American citizens should see the government’s interest in ESG investing for what it really is: its attempt to transfer wealth from one group of energy producers in our society to another group - the government’s currently favored group that benefits from grants and subsidies, and insider trading, in exchange for huge campaign contributions.

This Department of Labor rule calling for employee retirement plans to consider environmental, social and corporate governance (ESG) factors when selecting investments is purely politically driven and must be nullified.

Under 2020 federal regulations, retirement plans were required to consider only solid financial factors in selecting investments. That’s how it should be now and forever. It is difficult enough already for asset managers to make money for their investors, it seems. 

No one knows what, if any positive financial impact will result long term from that ESG investing.

It is estimated that $12 trillion is invested on behalf of 150 million Americans. Allowing ESG investing will jeopardize the retirement savings of millions of people.