During the Trump administration, a new term came into vogue among the woke crowd. It involved a way of evaluating institutions based on how they approached matters of environmental, social and governance issues, or ESG. Trump had the Department of Labor ban pension funds from taking ESG scores into consideration if it resulted in a lower return on investment for the retirees who pay into the fund. But now, under Joe Biden, the Department of Labor has reversed that rule. Managers of pension funds will now be allowed to consider ESG scores as part of their criteria for investing pension funds. (American Wire News)

The Biden Department of Labor has reversed a Trump-era rule that had effectively prohibited pension funds from investing retirees’ money into funds that benefit the environment but aren’t necessarily the best investment options.

The rule had made it so that pension funds had to prioritize maximizing profit over trying to save the planet. As a result, pension funds weren’t allowed to factor in an investment’s ESG score.

According to the Corporate Finance Institute, an ESG score is a “measurement or evaluation of a given company, fund, or security’s performance with respect to Environmental, Social, and Governance (ESG) issues.”

🧵 Today, we issued a final rule that allows retirement plan investors to take climate change and other environmental, social and governance (ESG) factors into consideration when making investment decisions: https://t.co/yg5MAntNFn (1/5)

— U.S. Department of Labor (@USDOL) November 22, 2022

The dishonest way that this change was being pitched by the Labor Department was just insulting. Labor Secretary Marty Walsh talked about the “potential financial benefits” of investing in companies with high ESG scores. One of his aides said the change would “make workers’ retirement savings and pensions more resilient.”

This is, as Colonel Sherman T. Potter would have said, a load of horse hockey. Multiple European countries started taking ESG scores into account for their own treasuries and funds and the results were uniformly disastrous. Making investment decisions based on how woke or environmentally friendly a given institution might be is completely disconnected from how profitable it’s likely to turn out to be. This scheme was primarily designed to steer more money into so-called “green energy” investments in solar and wind.

Keep in mind that the funds in question are in pension plans for retirees. Their primary goal is to maximize their returns so they can take care of themselves during their retirement years. Some of them may favor climate-friendly investments while others won’t give a hoot about it. If the fund managers are making decisions that don’t represent the interests of all of the plan participants, they aren’t doing their job.

A group of House Republicans including Congressman Greg Murphy are at least attempting to fight back against this. They recently introduced a bill called the Safeguarding Investment Options for Retirement Act. It seeks to curb the woke agenda in the executive branch and protect pensioners’ retirement plans.

NEW: I've introduced the Safeguarding Retirement Investment Options Act to protect Americans' retirement savings from President Biden's 'woke' #ESG agenda. Thanks to @RepCarolMiller @RepSmucker @RepDavid for supporting this key legislation. ⬇️https://t.co/D3CcoO6doo

— Congressman Greg Murphy, M.D. (@RepGregMurphy) October 19, 2022

Unfortunately, with control of Congress being split, there’s likely little that can be done for at least the next two years. The most retirees can likely do at this point is talk to someone about their own plans. If the plan is heavily into ESG and the returns are dropping, consider shopping around for a new one if possible.