Continuing down the path to transform every segment of American society into a woke, green Utopia, the Biden administration, through the Department of Labor (DOL), has issued a new rule “that allows plan fiduciaries to consider climate change and other environment, social, and governance factors when they select retirement investments and exercise shareholder rights, such as proxy voting.”
In tilting the regulatory playing field to favor ESG investing, the Biden DOL is reversing two Trump-era rules from spring 2020, which DOL now says “unnecessarily restrained fiduciaries ability to weigh environmental, social, and governance factors when choosing investments, even when those factors would benefit plan participants financially.”
In effect, the Biden administration is greenlighting politically driven asset managers to funnel investments into companies aligned with the current administration’s agenda and, just as important, to cut off investments to industries out of favor with Washington, denying them the capital they need to survive.
Government-Sponsored ESG Investing
By diverting investors’ money from producers of fossil fuels to developers of wind and solar power, for example, asset managers playing the ESG game can join forces with the administration and climate activists in moving the country toward “net-zero” emissions in the coming decades. Manufacturers of EVs and the batteries needed to propel them will also benefit from the government sponsored ESG investing.
People invested in 401(k), Individual Retirement Accounts (IRA), or union-sponsored pension funds will be directly affected by the new policy. As the Wall Street Journal (Nov. 25) pointed out:
The main point of the Biden rule is to give legal protection to retirement plan fiduciaries that invest based on ESG. A secondary goal is to steer more retirement savings into ESG funds that often charge higher fees by allowing retirement sponsors to offer them as default options in 401(k) plans. Workers automatically enrolled in default funds can opt out, but they usually don’t.
“Government climate policies can no doubt affect financial performance, but not necessarily in the way that ESG investors say,” the Journal adds. “Fossil-fuel producers are reaping enormous profits as Western governments seek to restrict supply. A pension plan that divests from fossil fuels would be less diversified and probably produce lower returns over the long run.”
ESG funds are already underperforming when compared with non-ESG investments. And the higher fees they usually charge are an added insult to investors. They are being short-changed in the name of saving the planet or promoting a more “diverse’ workplace.
The acute energy crisis that is gripping Europe – a region that is far ahead of the United States in its pursuit of “net-zero” emissions while increasing its reliance on wind and solar power – provides a preview of coming attractions when so-called climate policies guide decision makers in government and the private sector. No one should be surprised that the unkept, 30-year-old head of FTX was able to con “sophisticated” investors out of billions. Con artists are everywhere, and many of them are calling the shots in Washington and other global capitals.
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- Bonner Cohen, Ph. D.Bonner R. Cohen, Ph. D., is a senior policy analyst with CFACT, where he focuses on natural resources, energy, property rights, and geopolitical developments.
- Articles by Dr. Cohen have appeared in The Wall Street Journal, Forbes, Investor’s Busines Daily, The New York Post, The Washington Examiner, The Washington Times, The Hill, The Epoch Times, The Philadelphia Inquirer, The Atlanta Journal-Constitution, The Miami Herald, and dozens of other newspapers around the country.
- He has been interviewed on Fox News, Fox Business Network, CNN, NBC News, NPR, BBC, BBC Worldwide Television, N24 (German-language news network), and scores of radio stations in the U.S. and Canada.
- He has testified before the U.S. Senate Energy and Natural Resources Committee, the U.S. Senate Environment and Public Works Committee, the U.S. House Judiciary Committee, and the U.S. House Natural Resources Committee. Dr. Cohen has addressed conferences in the United States, United Kingdom, Germany, and Bangladesh.
- He has a B.A. from the University of Georgia and a Ph. D. – summa cum laude – from the University of Munich.
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November 30, 2022