Republicans Have A New Enemy: Socially Conscious Investing

Vivek Ramaswamy, the silly anti-woke hustler running for the GOP presidential nomination, has what he calls an anti-ESG platform

On Tuesday, Kentucky crackpot Andy Barr presented an anti-woke resolution (H.J. Res. 30) and it passed 216-204— every Republican voting aye and every Democrat voting nay except for Jared Golden of Maine who has in all but name become a Republican. He’s likely to leave the Democratic Party and become an independent sometime this cycle. Anyway, the resolution— if signed by Biden— would overturn a Biden administration investment rule that allows managers of retirement funds to consider the impact of climate change and other environmental, social and governance factors when picking investments. CNN reported that Republicans are whining that the role is “‘woke’ policy that pushes a liberal agenda on Americans and will hurt retirees’ bottom lines, while Democrats say it’s not about ideology and will help investors.” It’s a fight of ESG (environmental, social and governance) factors— the rule, promulgated last November removed restrictions imposed by the Trump Regime that made it difficult for 401(k) and other retirement plan sponsors to include climate-aligned and other ESG funds in the list of options available to participants.”

It passed the Senate yesterday, 50-46, Joe Manchin and Jon Tester having crossed the aisle to vote with the Republicans. (Fetterman is still in the hospital, Merkley was out and DiFi is lost in the void.)

The measure, which would rescind a Department of Labor rule, will next go to President Joe Biden’s desk as it was passed by the House on Tuesday. The administration, however, has issued a veto threat. As a result, passage of the resolution could pave the way for Biden to issue the first veto of his presidency.

Opponents of the rule could try to override a veto, but at this point it appears unlikely they could get the two-thirds majority needed in each chamber to do so.

The resolution, authored by GOP Sen. Mike Braun of Indiana, only needed a simple majority to pass. It passed on a vote of 50 to 46 with Democratic Sens. Joe Manchin of West Virginia and Jon Tester of Montana voting with Republicans.

Republican lawmakers advanced it under the Congressional Review Act, which allows Congress to roll back regulations from the executive branch without needing to clear the 60-vote threshold in the Senate that is necessary for most legislation.

Opponents of the rule have argued that it politicizes retirement investments and that the Biden administration is using it as a way to push a liberal agenda on Americans.

“The Biden Administration wants to let Wall Street use workers’ hard-earned savings to pursue left-wing political initiatives,” Senate GOP leader Mitch McConnell said in remarks on the Senate floor on Tuesday morning.

Republican Sen. John Barrasso of Wyoming said at a news conference on Tuesday, “What’s happened here is the woke and weaponized bureaucracy at the Department of Labor has come out with new regulations on retirement funds, and they want retirement funds to be invested in things that are consistent with their very liberal, left-wing agenda.”

Supporters of the rule argue that it is not a mandate– it allows, but does not require, the consideration of environmental, social and governance factors in investment selection.

Senate Majority Leader Chuck Schumer said on Wednesday that Republicans are “using the same tired attacks we’ve heard for a while now that this is more wokeness… But Republicans are missing or ignoring an important point: Nothing in the (Labor Department) rule imposes a mandate.”

“This isn’t about ideological preference, it’s about looking at the biggest picture possible for investments to minimize risk and maximize returns,” he said, noting it’s a narrow rule that is “literally allowing the free market to do its work.”

The statement of administration policy saying that Biden would veto the measure similarly states, “the 2022 rule is not a mandate– it does not require any fiduciary to make investment decisions based solely on ESG factors. The rule simply makes sure that retirement plan fiduciaries must engage in a risk and return analysis of their investment decisions and recognizes that these factors can be relevant to that analysis.”

On Tuesday, David Gelles reported on how ESG investing became another GOP mania. “It’s been a widely accepted trend in financial circles for nearly two decades,” he wrote. $18 trillion are invested din funds that follow ESG principles. “But suddenly, Republicans have launched an assault on a philosophy that says that companies should be concerned with not just profits but also how their businesses affect the environment and society.

[I]n recent months, conservatives have increasingly attacked the practice, arguing that it promotes liberal priorities ranging from renewable energy to the Black Lives Matter movement.

And while ESG applies to everything from diversity among corporate leaders to corruption controls, it’s the “E” in ESG— the idea that the private sector needs to consider its impact on the environment— that has emerged as the top target of Republicans.

Officials in Republican-led states [Texas] argue that it would lead to disinvestment in fossil fuel companies that provide tax revenue and jobs in their states, making it a top target of right-wing commentators and politicians.

…Patrick McHenry, the North Carolina [corporate whore] who leads the House Financial Services Committee, announced the formation of a “Republican ESG Working Group.” Republicans plan hearings this year at which conservative lawmakers are likely to grill executives from some of the nation’s biggest banks on their views about climate change, social issues and more.

There are some indications that the conservative pushback is gaining traction. Vanguard, one of the world’s largest investment firms, recently withdrew from the Net Zero Asset Managers initiative, an effort intended to get institutional money managers engaged in the fight against climate change.

BlackRock, the world’s largest asset manager, has been going out of its way to remind politicians that it still invests in fossil fuel industries, even as it supports efforts to reduce planet warming emissions.

…It is unclear whether applying environmental and social principles to investing is actually good for business. Some studies have shown that companies that embrace environmental and social goals outperform their peers in the long run. But other studies show the opposite. And as the stock market slumped last year, oil and gas stock prices rose sharply.

…Senator Sheldon Whitehouse, Democrat of Rhode Island, said he believed the Republican position on ESG was more about ginning up outrage than about just how much of a financial risk climate change posed to long term investments.

They invent culture-war provocations that drive clicks, and woke capitalism is part of that,” he said.

Whitehouse added that he believed the fossil fuel industry was responsible for funding much of the pushback. Groups like the Texas Public Policy Foundation, which has been opposing climate action around the country, are supported by oil and gas companies. And the oil and gas industry continues to donate to Republicans at a far greater rate than it does to Democrats, according to data compiled by OpenSecrets.

And yet with each week, Republicans around the country are intensifying their campaign.

This month, Gov. Ron DeSantis of Florida said he would seek to bar the state from considering ESG factors when issuing municipal bonds. And a group of Republican attorneys general recently challenged the two major proxy advisory firms, which influence how investors vote their shares, over their consideration of climate and social goals when making recommendations.