Congress is set to rebuke Biden’s ESG agenda

The Big Picture

Working families and retirees are grappling with the harsh economic realities of high inflation and the looming fiscal crises of programs like Social Security and Medicare, which are facing insolvency in the near future. The last thing Americans need now is politically-motivated investment strategies putting their retirement savings at risk. 

The Details 

To protect retirement savings from investment managers’ social and political preferences, the Employee Retirement Income Security Act (ERISA) requires investment managers to select investments based solely on monetary considerations. During the Trump Administration, the Department of Labor adopted a rule to make clear that non-monetary considerations could not be used in selecting investments. Unfortunately, the Biden Administration’s Department of Labor eliminated that rule and adopted a rule that allows investment managers to consider non-monetary factors.. 

As a result, 401(k) investment managers are now able to put money in so-called Environmental, Social, and corporate Governance (“ESG”) investments without the consent of the employee. These ESG funds are politically favored stocks of companies that promote a far-left agenda, such as race and sex quotas for hiring, employee training based on Critical Race Theory, and environmental extremism.

ESG funds have underperformed for years, place politics ahead of fiduciary duty to investors, and advance left-wing causes while depriving politically unpopular industries such as fossil fuel, firearm, and tobacco companies of funds. Placing a political agenda ahead of the employee’s financial well-being is an unethical practice and a breach of the fiduciary duty owed to the employee. 

Why it Matters

Congress is taking up a resolution to disapprove the Biden Department of Labor rule using the Congressional Review Act (CRA). The CRA provides Congress a pathway to eliminating new regulations issued by the executive branch. Both houses of Congress must pass a joint resolution to disapprove a rule, which the president must sign. 

The CRA served as a valuable tool for Republicans in the early days of the Trump administration, allowing the Republican House and Senate to roll back regulations issued during the last 60 days of Barack Obama’s presidency. Unfortunately, without two-thirds support in both chambers of Congress, this particular resolution will not be able to overcome the presumptive first veto of the Biden administration.  

While this resolution and its possible bipartisan support represent an important signal to the Biden administration, Congress must recognize that it has neglected its responsibility as the lawmaking branch of government for years. Increasingly, the federal bureaucracy dictates the rules that govern American citizens’ lives. According to the Competitive Enterprise Institute, federal regulations cost nearly $1.9 trillion annually. If the federal regulatory state were its own economy, it would be one of the largest in the world. 

The CRA to disapprove the Department of Labor’s ESG rule is a stark reminder that Congress has for years shirked its responsibility and abdicated its constitutional role to executive agencies. Lawmakers should take a serious look at scaling back the enormous rule-making authority of the executive branch and implement reforms such as the REINS Act to bolster Congress’s Article I authority. The REINS Act would amend the Congressional Review Act to require congressional approval of rules with an annual economic impact of $100 million or more adopted by regulatory agencies. 

The post Congress is set to rebuke Biden’s ESG agenda appeared first on FreedomWorks.