October 3, 2023

Top Line

The Republican-controlled House is expected to vote Tuesday on a bill that would block a Biden rule allowing retirement funds to engage in environmental, social and governance (ESG) investments based on socially conscious factors. But helps screen investing — intensifying a GOP push to challenge a “woke” practice that has gained widespread adoption on Wall Street and siphoned off trillions of dollars in investor funds.

important facts

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ESG investing considers non-financial factors in its investment decisions, taking into account social responsibility, which can lead to restrictions on investing in gun and fossil fuel companies.

practice is up traction Companies on Wall Street promote social and environmental efforts, but increasingly, Republicans have criticized ESG Investing is saying that financial institutions should not use their power to invest in so-called vigilante political agendas.

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A bill is expected to be voted on in the House on Tuesday-City: by Republican Rep. Andy Barr (R.-Ky) — to block Labor Department rule allowing fund managers to consider ESG practices for retirement plans, saying retirement plans should “woke” agenda Rather than focusing only on maximization of returns.

The bill’s fate is unclear, but Republicans believe they will be able to pass a companion bill through the Senate using the Congressional Review Act, which can bypass the Senate’s “filibuster” rule, which allows most 60 votes are needed to pass the law.

Criticism of ESG investing escalated last week when 25 GOP-led states asked a federal judge to block a Biden administration rule that took effect Jan. 30 and required retirement plans to consider ESG factors in their investment decisions. allows.

group, which filed a trial seeking to block the rule entirely in federal court, arguing the ESG provisions “undermine significant protections for [the] Retirement savings of 152 million workers by focusing on “conscious” social rules rather than financial returns”.

The lawsuit further claims that the ESG provisions conflict with tax and labor laws, which require retirement advisors to act in the best interests of their clients and that advisors prioritize their own ESG policy preferences rather than long-term financial ones. Puts the interests of the customers above their own by allowing them to give. Return.

However, the Department of Labor and proponents of the rule argue that ESG factors are relevant to financial returns, as subjecting investments to climate change risks may ultimately affect profits.

While no federal legislation has been passed to outright ban state assets in ESG strategies, several Republican states, including Iowa, Wyoming and North Dakota, have enacted their own laws. Law Investing using social factors for investment strategies.

Senate Republicans also have Proposed Legislation to ban the Biden regime, though its chances of passage in the Democrat-led chamber are very uncertain

big number

According to PwC, ESG assets are expected To capture $33 trillion by 2026—about 21.5% of total assets under management.

main background

During the Trump administration, the Department of Labor passed Rule Discouraging ESGs from investing in retirement plans. The rules for private pension plans in the Early Retirement Income Security Act of 1974 state that they cannot provide investments in ESG that sacrifice investment returns. However, in November, President Joe Biden Loose regulations and made it easier for employers to consider climate change and other ESG investments for their 401(k) plans. As Republicans squash state assets being used for ESG or social impact investing of any kind, local banking groups have done too pushed back against laws prohibiting such investments.

tangent line

Vivek Ramaswamy, a millionaire financier who this week announced his bid for the 2024 GOP nomination, rose to prominence in right-wing circles for his criticism of “wake capitalism”. Ramaswamy wrote a letter to both Apple And disney CEOs, urging them to stop hiring practices based on race, gender and politics, and to refrain from making political statements on behalf of the company, respectively. His investment firm has also criticized BlackRock, the world’s largest asset management company, for its ESG Behaviourwho drew Anger Republican states. In August, a group of 19 state attorneys general wrote a Letter BlackRock’s billionaire CEO, Larry Fink, claimed the firm’s ESG practices were harmful to his state pensions, and in the following months Republican-led states including Florida, Missouri And LouisianaCollectively pulled out over $3 billion from BlackRock pension funds citing ESG policies.

States seeking to ban ESG in retirement plans

  • Alabama
  • Alaska
  • his ark
  • Florida
  • Georgia
  • Indiana
  • Idaho
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Mississippi
  • Missouri
  • Montana
  • nebraska
  • new Hampshire
  • North Dakota
  • ohio
  • South Carolina
  • Tennessee
  • Texas
  • Utah
  • Virginia
  • West Virginia
  • Wyoming

Trump’s 2024 GOP contest: Investment firm manager Vivek Ramaswamy announces presidential runforbes,

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