Trump banned pension plans from mixing awakening with profits;  Biden reverses this rule |  The daily thread

Trump banned pension plans from mixing awakening with profits; Biden reverses this rule | The daily thread

President Joe Biden’s Department of Labor has introduced measures to reverse a ban on environmental, social and governance investing, also known as ESG, among trustees managing pension funds, a rule the former President Donald Trump established during his final days in office.

The agency released a final rule on Tuesday that mirrored the Biden administration’s directive to protect the economy from “climate-related financial risk that could threaten the savings and pensions of American workers and families.” Under the new rule, trustees are permitted to weigh “the economic effects of climate change and other ESG considerations” as long as those concerns are relevant to a risk and return analysis.

Benefits Security Administration acting assistant secretary Ali Khawar said last year that the measure, which had been subject to a public comment period, would “strengthen the resilience of the retirement savings and workers’ pensions by removing the artificial barriers…caused by the rules of the previous administration. She added that “climate change and other ESG factors can be financially material and, when they are, their consideration will inevitably lead to better risk-adjusted returns over the long term, thereby protecting the company. ‘retirement savings of American workers’.

Critics of the ESG movement argue that the investment philosophy mixes political and social causes in a way that fails to maximize returns for shareholders. The old rule created by the Trump administration prevented “trustees from selecting investments based on non-monetary considerations” and required them to “base their investment decisions on financial factors” only.

West Virginia State Treasurer Riley Moore noted in an interview with The Daily Wire that allowing supporters of the ESG movement to access retirement funds puts Americans at significant downside risk. “It’s certainly reckless because they’re playing with other people’s retirement money,” he said. “When you implement these ESG investment strategies, you become less diversified in your investments.”

Moore noted that ESG investing has suffered over the past year as tech stocks languish and the energy sector experiences outsized profitability. Harvard Management Company, which manages the elite university’s endowment, admitted last month that a recent $2.3 billion loss was attributable to fossil fuel divestment efforts, though the organization remains ” proud to be deeply committed to the issue of sustainability”.

“It’s almost along the lines of religious fervor, where they’re willing to take a loss to advance their political ideology,” Moore commented. “They need to maximize returns for their beneficiaries so they can feel secure in retirement.”

West Virginia ranked among the top six states for energy production in 2019, according to data from the Energy Information Administration. Moore called pressure from ratings agencies to downgrade energy-producing states “coercive capitalism,” observing that his state’s finances have “never been better” despite the presence of a robust fossil fuel sector. . Meanwhile, the U.S. economy as a whole will suffer as investment dollars fail to reach critical oil and gas companies in energy-rich states.

Moore, who recently announced his candidacy for Congress, said lawmakers could ban rating agencies from “pushing their world view” in the market and examine the use of proxy voting by asset management companies. to drive the ESG movement forward. “There’s an awful lot that can be done at the federal level to fill the gaps where states are limited in capacity, while still respecting federalism,” he added.

Americans would prefer their investment dollars to remain politically neutral, according to a recent poll. An exclusive poll by The Daily Wire showed that 64% of respondents believe that “individual investors whose savings are invested” should ultimately decide whether retirement and pension funds are allocated according to ESG standards, while only 20 % think that “the asset managers of Wall Street” should make such decisions.

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