Republican Louisiana Senator Bill Cassidy plans to introduce legislation to overturn a Biden-Harris administration rule that permits retirement funds to consider factors like racial justice and climate change in their investment decisions. The proposed bill would mandate that retirement funds base their investment choices solely on pecuniary factors, effectively prohibiting environmental, social, and governance (ESG) investing. Cassidy argues that asset managers should prioritize maximizing returns for retirement over supporting a particular political ideology. Under current Department of Labor rules, retirement plan administrators can consider ESG factors when evaluating investment opportunities of similar quality. However, Cassidy s bill would require funds to document their decision-making process and randomly select between equivalent options if multiple investment opportunities are deemed equal. ESG investing has faced criticism due to its volatility and potential to jeopardize the long-term stability of retirement accounts. Investors have pulled $13 billion from ESG funds in 2023, marking the worst year on record. The total assets in American ESG funds stood at $315 billion as of September 2023. Sen. Cassidy s proposed legislation echoes a similar bill passed by Congress last year, which also aimed to ban ESG investing in retirement funds. However, then-Democratic West Virginia Senator Joe Manchin supported the effort, and President Biden vetoed the legislation. The White House has not commented on whether Biden would veto another attempt to prohibit ESG investing in retirement funds. Even if Cassidy s bill fails, it could still face legal challenges, as the Fifth Circuit Court of Appeals ruled in July that a Texas judge must reconsider his decision upholding the ESG regulation due to the Chevron deference, a legal doctrine recently overturned by the Supreme Court. Utah State Treasurer Marlo Oaks criticized ESG investments, stating that they divert corporate governance to advance ideological objectives that may be detrimental to long-term shareholder value. He argued that complex global and societal issues, such as climate change, income inequality
Source: dailycaller.comPublished on 2024-09-26
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