GOP guns for ESG

Manchin lone Dem ‘invested’ in 401(k) fight

Change the climate

[It is] irresponsible of the Biden Administration to jeopardize retirement savings for more than 150 million Americans for purely political purposes.

— West Virginia Senator Joe Manchin

A Republican-led group of 50 US senators is aiming to reverse a Biden administration-backed rule that they claim is effectively “politicizing Americans’ 401(k)s” by allowing retirement managers to consider environmental, social and governance standards — known as “ESG.”

The group, which includes all 49 Republican senators as well as moderate Democratic Sen. Joe Manchin of West Virginia, is targeting a Labor Department rule change that took effect Jan. 30.

Sen. Mike Braun (R-Ind.), who introduced the resolution alongside Rep. Andy Barr (R-Ky.), said the Biden-backed ESG investment rule change was effectively “jeopardizing retirement savings for millions of Americans for a political agenda.”

“In a time when Americans’ 401(k)s have already taken such a hit due to market downturns and record high inflation, the last thing we should do is encourage fiduciaries to make decisions with a lower rate of return for purely ideological reasons,” Braun said in a statement.

Republican lawmakers have been increasingly wary of ESG-based investments in recent years, with critics arguing that the push to consider climate change and other factors while doing business is driven by left-leaning ideology rather than business fundamentals.

The lawmakers said the ESG rule impacts the retirement savings of 152 million American workers whose accounts are governed by the Employee Retirement Income Security Act, or ERISA.

The change impacted existing ERISA standards.

Manchin said it was “irresponsible of the Biden Administration to jeopardize retirement savings for more than 150 million Americans for purely political purposes.”

Even with the moderate Democrat’s support, the Republican-backed resolution could face an uphill battle for passage in the Senate. The Democrats hold a 51-49 majority in the chamber, and at least one other Democrat would have to back the legislation.