AMAC Magazine: Volume 17, Issue 3 - May/June 2023

ESG investing often prioritizes a political agenda over the best financial returns for customers. The last thing seniors need is government pension offices or financial institutions squandering their hard-earned retirement savings.

able governance. For pension funds, investing in companies or funds that engage in greenwashing can lead to significant financial losses and reputational damage. In recent months, the detrimental effects of ESG investing have become increasingly clear. In November 2022, the Biden Labor Department issued a rule overturn- ing the Trump administration’s ban on ESG-based federal pension fund investing. In response, House Republicans introduced, H.J.Res. 30, a commonsense joint resolution to protect federal workers from this unproven and highly-risky form of investing. In a rare bipartisan victory, both the Republican controlled House and the Democratic controlled Senate passed the legislation, but President Biden vetoed the measure even though he faced opposition within his own party. “Allowing managers of private employee retirement plans to consider woke ESG factors not only undermines retirees’ financial inter- ests, it puts these managers in conflict with their fiduciary duties under the

Employment Retirement Income Security Act (ERISA),” the Club for Growth said in a statement. “The Biden Administration rule is more woke bureaucratic overreach that imperils retirees’ hard-earned savings accounts and aims to corrode what should be a freely operating market with woke requirements that shift more control to government.” While Congress has finally stepped into this debate, state governors and legislatures have been active against harmful ESG investments using state pensions. Fourteen states — Arizona, Florida, Idaho, Indiana, Kentucky, Louisiana, Minnesota, North Dakota, Oklahoma, Pennsylvania, South Caro- lina, Texas, Utah, and West Virginia — have adopted legislation limiting state business with ESG investment funds or financial services. Some states, like Texas, have gone further in limiting state pension investing with financial services companies that boycott coal, oil and gas, other energy companies, or other critical industries impacting the environment like agriculture, lumber, or mining. So what can people do to protect their retirement accounts or pension funds

from the potential pitfalls of ESG investing? They can make sure their pension or retirement fund manag- ers prioritize financial performance above all else. People have every right to know that their pensions or retire- ment accounts are being invested responsibly, and should be notified if their institution chooses to prioritize ESG investing over more traditional, proven investments. Individuals have every right to invest in ESG and risk potential losses. But government pension offices and retirement fund managers should not force their clients to participate in ESG invest- ing, which has little track record of good returns. ESG investing often prioritizes a political agenda over the best finan- cial returns for customers. The last thing seniors need is government pension offices or financial institu- tions squandering their hard-earned retirement savings. Palmer Schoening Palmer Schoening is part of AMAC Action’s advocacy team in Washington, DC. He is a graduate of Hillsdale College and George Mason University’s School of Public Policy.

This article has been prepared for informational purposes only and should not be relied on for financial, tax, legal, or accounting advice. You should always consult your tax, legal, and accounting advisors before engaging in any financial transaction.

10 • AMAC Magazine

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