Manchin Says Biden’s ‘Radical’ ESG Agenda Is ‘Absolutely Infuriating,’ Undermines National Security

Manchin Says Biden’s ‘Radical’ ESG Agenda Is ‘Absolutely Infuriating,’ Undermines National Security
Sen. Joe Manchin (D-W.Va.), chairman of the Senate Energy and Natural Resources Committee, presides over a hearing on battery technology, at the Dirksen Senate Office Building in Washington, on Sept. 22, 2022. (Kevin Dietsch/Getty Images)
Tom Ozimek
3/22/2023
Updated:
3/22/2023
0:00

Senator Joe Manchin (D-W.Va.) sharply criticized the Biden administration on Monday after President Joe Biden vetoed bipartisan legislation aimed at blocking a regulation that would push private retirement plan fiduciaries to consider environment, social, and governance (ESG) factors in investment decisions for tens of millions of savers.

Manchin, one of two Senate Democrats who voted with Republicans to nullify the proposed Department of Labor (DOL) rule on ESG, argued that the Biden administration was putting a radically progressive agenda ahead of the financial well-being of 150 million Americans while undermining national security.

“This administration continues to prioritize their radical policy agenda over the economic, energy, and national security needs of our country, and it is absolutely infuriating,” Manchin said in a statement.

“West Virginians are under increasing stress as we continue to recover from a once-in-a-generation pandemic, pay the bills amid record inflation, and face the largest land war in Europe since World War II,” he continued.

“The administration’s unrelenting campaign to advance a radical social and environmental agenda is only exacerbating these challenges.”

Manchin argued that the ESG rule would undercut America’s security and endanger retirement savings for tens of millions of American savers.

“This ESG rule will weaken our energy, national, and economic security while jeopardizing the hard-earned retirement savings of 150 million West Virginians and Americans,” Manchin said.

“Despite a clear and bipartisan rejection of the rule from Congress, President Biden is choosing to put his administration’s progressive agenda above the well-being of the American people.”

The White House did not immediately return a request for comment.

Biden Veto

The nullification resolution passed 216–204 in the House and 50–46 in the Senate, with Sen. John Tester (D-Mont.) being the only other Democrat senator to join Manchin in opposing the ESG rule.
The measure targeted Biden’s “Final Rule on Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” which became effective at the end of January.

Biden vetoed the nullification resolution, with a two-thirds majority required in each chamber to override it.

The president defended his veto—the first of his administration—saying in a statement that it helps retirement plan fiduciaries to make investment decisions on the basis of more complete information.

“There is extensive evidence showing that environmental, social, and governance factors can have a material impact on markets, industries, and businesses. But the Republican-led resolution would force retirement managers to ignore these relevant risk factors, disregarding the principles of free markets and jeopardizing the life savings of working families and retirees,” Biden said.

Plan fiduciaries should be able to consider factors such as the “physical risk of climate change” when making investment decisions and the rule helps them do that, Biden argued.

ESG Controversy

ESG is an umbrella term that includes concepts such as climate change, critical race theory, and social justice. It embraces policies such as reducing fossil fuel production, establishing diversity, equity, and inclusion programs, and implementing corporate racial and gender quotas.

In 2014, the ESG movement had around $19 trillion to its name. In the past nine years, that number has nearly tripled, with ESG-compliant corporations and individuals now controlling $55 trillion in assets. By 2025, it is projected that fully half of all global financial assets under management will be ESG-compliant.

Critics of ESG say that fund managers can’t credibly demonstrate higher returns from ESG investments or even define ESG criteria with precision.

“It’s just a label that’s slapped on, and it’s not clear that ESG scores are related to actual improvements of any sort—environmental or social justice or the quality of governance,” Robert Wright, a senior research fellow at the American Institute for Economic Research, told The Epoch Times in an early March interview.

“Problem number one is we just don’t know what these things are measuring,” Wright added. “There have been several studies that have shown that funds that have highly rated ESG companies in them do not outperform funds with lower ESG scores—they simply just charge more for the ESG label.

“That on its face doesn’t seem to be following fiduciary responsibility that you should be investing for the highest net return for pensioners.”

Several academic studies have also shown that rather than boosting investment returns, ESG actually lowers returns.

A 2020 study by the Boston College Center for Retirement Research found that ESG investing reduced pensioners’ returns by 0.70–0.90 percent annually, with the majority of the difference attributable to higher management fees for ESG funds.

Lawmakers opposed to the DOL rule have said ESG standards push a left-wing political agenda in business and have expressed fears that so-called “woke” corporations and investors will bully firms that don’t fall in line.

House Speaker Kevin McCarthy (R-Calif.) responded to the president’s veto in a statement: “President Biden’s first veto is against a bipartisan bill that protects retirement savings from political interference,” McCarthy said.

“It is clear that President Biden wants Wall Street to use your hard-earned money not to grow your savings but to fund a far-left political agenda. That will hurt seniors and workers, especially after President Biden’s reckless spending caused record inflation and rapid interest rate hikes.”

Those in favor of ESG standards, such as Senate Majority Leader Chuck Schumer (D-N.Y.), have said if the free market wants to use ESG factors for investing, politicians should not interfere.

“ESG opponents are trying to turn it into a dirty acronym, deploying attacks they have long used for elements of a so-called woke agenda. They call ESG wokeness. They call it a cult. They call it an incursion into free markets,” Schumer wrote in an op-ed for The Wall Street Journal earlier this month.

“We’ve heard it all before. I say ESG is just common sense.”

Joseph Lord, Savannah Hulsey Pointer, Nathan Worcester, and Kevin Stocklin contributed to this report.
Tom Ozimek is a senior reporter for The Epoch Times. He has a broad background in journalism, deposit insurance, marketing and communications, and adult education.
twitter
Related Topics