E&W Blog

As if #BidenInflation wasn't already hurting those looking to retire, now the Biden administration is signaling it will bully workers and retirees into using anti-worker environmental, social, and governance (ESG) factors when making retirement investment decisions. ESG standards are used to determine how “well” a company or investment adheres to leftist environmental and social policies; covering everything from anti-energy policies and critical race theory-inspired employment practices to pushing big labor demands.

Though many high-profile companies are pushing ESG standards, a majority of investors would prefer companies focus on profits instead of politics. Skepticism is especially high among retirees who want their retirement administrators to make the best financial decisions with their savings.

ESG scores are inherently arbitrary and subjective, not to mention hypocritical. For example, last month an ESG-oriented S&P 500 index kicked Tesla off its list, claiming the electric car manufacturer fell short of social and governance standards. Meanwhile, the same index retained Russian energy giants Gazprom and Rosneft.

Thanks to the Biden administration, ESG requirements now threaten to harm retirement savings. Congressional Republicans already sounded the alarm on this issue. In December 2021, Representatives Virginia Foxx (R-NC) and Rick Allen (R-GA) sent a letter to Labor Secretary Walsh condemning the Biden administration’s efforts to bind Americans’ pension and retirement plans to ESG factors.   

Subordinating the financial interests of retirement plan participants to radical environmental and social standards violates the Employee Retirement Income Security Act (ERISA). ERISA requires pension and retirement plan fiduciaries to act for the exclusive financial benefit of participants and beneficiaries. ESG investments that promote collateral, non-financial objectives are infamously high-risk relative to more conventional retirement investments. However, DOL is legally required to ensure that ERISA fiduciaries are acting in the best interests of Americans—not far-left activists. When Americans invest their retirement savings, they do so to create a more secure financial future, not to further the left’s political agenda.

The Biden administration is putting the financial future of too many retirees at risk in its efforts to bypass Congress and implement its climate and social agenda through executive fiat.