WASHINGTON – Today Congress approved a measure aimed at overturning a recent Department of Labor rule that allows retirement plans to include investment options that consider environmental, social, and corporate governance (ESG) criteria and allows retirement plan fiduciaries to vote on ESG-related shareholder resolutions.
By passing a joint resolution under the Congressional Review Act (CRA), House and Senate Republicans, joined by a few Democrats, seek to nullify the DOL’s Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights rule, which went into effect on January 30. The CRA gives Congress 60 days after a rule goes into effect to vote to overturn it.
In response, Green America, which represents 250,000 individual consumers and investors and nearly 2,000 businesses and investment firms, calls on President Biden to veto the resolution.
“Decades of investment experience prove that taking environmental, social, and corporate governance criteria into account provides competitive returns by giving investors a greater understanding of risk and opportunity,” said Cathy Cowan Becker, Responsible Finance Campaign Director at Green America. “In particular, the ability to consider climate impacts is a top concern for our members and investors. President Biden must veto this resolution to ensure we can continue common-sense investing.”
The DOL rule is a reversal of two rules promulgated during the Trump administration that required retirement plan fiduciaries to invest solely on the basis of “pecuniary factors,” and made it difficult to vote on ESG-related shareholder resolutions. These rules caused widespread confusion and had a chilling effect on integrating ESG factors into investment decisions.
In preparing its current rule, the DOL heard from thousands of stakeholders, including asset managers, labor organizations, corporate America, consumer groups, service providers, workers, investment advisers, and almost 7,000 members of Green America who signed our petition in support.
The rule allows, but does not compel, consideration of ESG criteria in investment decisions and shareholder votes, and confirms that fiduciaries may not sacrifice investment returns to promote social policy goals.
The Congressional resolution overturning the DOL rule takes choice away from investors who increasingly favor ESG options in their portfolios. A recent survey by Penn State’s Center for the Business of Sustainability and communications firm ROKK Solutions found that 63 percent of voters – including 70 percent of Republicans – oppose government restrictions on ESG investments.
President Biden must protect the interests of U.S. investors by vetoing the Congressional resolution that limits our ability to be fully informed about our own investments.
ABOUT GREEN AMERICA
Green America is the nation’s leading green economy organization. Founded in 1982, Green America provides the economic strategies, organizing power and practical tools for businesses and individuals to solve today’s social and environmental problems. http://www.GreenAmerica.org
MEDIA CONTACT: Max Karlin for Green America, (703) 276-3255, or mkarlin@hastingsgroupmedia.com.
