NRPLUS MEMBER ARTICLE P resident Biden is jeopardizing the financial security and individual rights of tens of millions of Americans. That’s the reality of his March 20 veto of Congress’s bipartisan repeal of the Department of Labor’s new rule on environmental, social, and governance (ESG) investing.
Essentially, the rule allows pension-fund and asset managers to invest their clients’ money in political fads, regardless of whether they make financial sense or clients want it. Congress voted to repeal it because it threatens the returns — and undermines the trust — of policemen, teachers, and every worker with a retirement account. But since the president is more interested in securing leftist priorities than protecting the retirement savings of the American people, he chose to use his first ever veto to overrule Congress.
That means it is time for states to step up.
Indeed, I am calling on every state to implement the transparency and protection that workers and everyday investors deserve. Before the Biden administration’s ESG rule, pension-fund and asset managers could only invest people’s money based on factors that materially affect financial return. This is common sense: An asset managers job is to make money for the people who entrust them with their investment and retirement funds. But now, the Biden administration has empowered them to spend Americans’ money however they please — and they don’t have to say a word about what they’re doing or why.
This is wrong. Hardworking Americans should always be aware of how financial elites are spending their hard-earned money. If a pension fund is deliberately investing in companies that cave to labor unions, investors should know. If an asset manager is using clients’ money to force corporate boards to hire people by race or promote abortion, investors should know. And if a broker is refusing to invest in oil and gas companies out of some deep-seated concern for “climate change” — while simultaneously giving a free pass to companies complicit in China’s gross human-rights abuses — investors should absolutely know.
Such knowledge empowers Americans to pick the investment products that align with their values and financial goals. Equally important, it allows them to avoid unwittingly wasting their money and undermining their deepest beliefs. ESG funds have a history of underperforming in the broader market, and they unquestionably serve a political agenda rather than focus on delivering for investors.
States can and must end this injustice. On January 17, I filed a proposed rule that requires any company or individual selling ESG-investment products in Missouri to inform clients that they are using nonfinancial considerations when choosing investments. This makes Missourians aware that their retirement money is potentially being used in ways that threaten their retirement goals. What’s more, my rule requires that companies get clients’ consent before investing their money in ESG products. Now, no politically motivated financial adviser can fritter away Missourians’ money without their full knowledge and express approval.
Every state should follow suit. Missouri is already working with secretaries in Wyoming and Georgia to implement similar rules relating to ESG investments. And I am working with Missouri lawmakers to codify this rule into state law with House Bill 863, thereby preventing a future secretary of state from unilaterally repealing these protections. Other states can and should do the same. It is the least we can do to give investors and workers long-term security and confidence.
Under my proposed rule, pension-fund and asset managers are still able to offer ESG products in Missouri. Even if financial common sense counsels against it, economic freedom requires as much, and ESG deserves the chance to compete in the open market — just as investors deserve openness from the financial companies pushing these products. If ESG is all it’s cracked up to be, people will choose it of their own free will.
It’s telling that this administration is infringing on that freedom. The Department of Labor’s ESG rule has no transparency and no real safeguards for everyday investors. Instead, it risks their money to advance a blatant political agenda. And while President Biden stopped Congress from repealing this attack on investors, he can’t stop states such as Missouri from protecting the American people.