Last week, the Department of Labor announced the finalization of a controversial rule allowing companies to prioritize environmental, social, and governance (ESG) initiatives when choosing retirement plans, reversing a Trump-era rule. Once in effect, the new rule will enable fund managers to prioritize ESG factors like climate change over shareholder returns. In this case, employers may choose to invest money employees place in a pension fund or a 401K with managers who prioritize ESG criteria.
This is the latest example of the Biden Administration attempting to jam the progressive ESG agenda through at the cost of everyday Americans’ retirement security, according to Lousiana State Treasurer and State Financial Officers Foundation (SFOF) Chairman John Schroder. “The Biden Administration is attempting to pull a fast one on the American people by pushing the progressive ESG agenda through unelected channels like the Department of Labor. They’re going through DOL to install initiatives like the Green New Deal without the checks of the legislative process.”
“Not only will the adoption of this rule prove devastating for hardworking American retirees, but it will also threaten America’s national security and energy interdependence forcing reliance abroad. American retirement dollars should be invested for the best return and profit, not to bolster social initiatives chosen at a whim by fund managers and their favorite bureaucrats.” Numerous state financial officers like Shroder have been pushing back on the ESG agenda at the state and national levels.
In October, Schroder sent a letter to BlackRock CEO Larry Fink informing him that $794 million in Louisiana State Treasury funds would be removed from the investment firm. Following the SFOF national meeting on Nov. 14, the group launched an educational website called Our Money, Our Values so Americans can understand precisely what ESG investing is and how it affects them. After speaking with members of Congress and Senators during the annual meeting, Schroder had to decide what action he could take in his elected position. “What can I do as State Treasurer of Louisiana? I have to go educate.”
Now he is making the rounds to 13 state-level pension boards to talk about ESG investing. “What is being understated is the losses ESG funds are suffering. The pensioners aren’t at risk because the state serves as the backstop when the liquidity of a public pension goes south. The state is the taxpayer, and 75-85% of these funds already come from Louisiana taxpayers,” Schroder said. At least one analyst has already downgraded BlackRock for the risks in its ESG investing, which include further divestment of state treasury funds and public pensions. Other states, such as West Virginia, Utah, and Texas, have already taken action.
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Schroder emphasized, “The Biden administration has rulemaking on their side. They want to force behavior on the American people without going through their elected representatives. For anybody to believe that pushing ESGs is not radical, they either don’t understand what they are or don’t care.” The Chief Executive Officer of the SFOF, Derek Kreifels, added, “ESG is crippling our oil and gas industry, attacking our Second Amendment rights, and adding meritless racial or gender quotas for major corporations.”
Schroder says, “ESG is one of those things that will be a much larger topic a year from now if we can effectively educate voters on how ESG affects the price of products they buy every day.” He continued, “The Biden administration and ESG investors are trying to crush the American oil and gas industry while they ignore China’s use of fossil fuels and allow Chevron to resume drilling in Venezuela. It is hypocritical and unnecessary,” Schoder asserted. “Energy is abundant and available in the U.S., but supply is short. These shortages hurt hardworking Americans the most.”
Looking ahead, Schroder says, “I want to convince the pension boards to invest in America and, more specifically, in Louisiana. This may require selecting new funds or a new fund manager.” He said that many Americans don’t know how much of their retirement funds are invested in China through large investment managers pushing ESGs. Most of the equipment required for renewable energy, like wind and solar, is made in China, and firms like BlackRock are betting on them. CEO Larry Fink once said, “I continue to believe firmly China will be one of the biggest opportunities for BlackRock over the long term, both for asset managers and investors.”
Kreifels added, “This [ESG investing] is not ‘responsible investing.’ This is a subjective ploy to evade fiduciary responsibility. It should be concerning to all Americans that those in power are willingly putting their politics over profits and risking our hard-earned retirement dollars.”
Schroder’s concern was more to the point: “If we don’t invest in the United States, who will? China buys assets in America for control. We need to invest for growth and our future.”
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