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A
growing number of lawmakers from more than a dozen states have
been denouncing the incorporation of ESG principles into
investing and business, saying they put retirement savings plans
at risk.
The S&P Global Clean Energy Index has plunged this year, as wind
and solar stocks have suffered over various issues.
In a lawsuit before the New York Supreme Court, a group of
employees said a decision to rid public pension funds of fossil
fuel investments put their retirement at risk. If successful,
the lawsuit could open the floodgates for new legal claims for
critics of ESG investing.
During a recent U.S. House Ways and Means Committee hearing,
Illinois U.S. Rep. Darin LaHood, R-Peoria, agreed with the
sentiment.
“The fixation on ESG activism by the executive branch and many
U.S. companies is really leaving seniors and people that save
money in the middle class and their retirement at risk,” LaHood.
LaHood highlighted an article in the Harvard Business Review
that said “corporate managers trying to maximize long term
shareholder’s value should, of their own accord, pay attention
to employee, customer, community and environmental interest on
this basis. Setting ESG targets may actually distort decision
making.”
Illinois Treasurer Michael Frerichs testified at a U.S. House
hearing on ESG practices earlier this year that there is a
campaign to blacklist financial firms that embrace ESG efforts.
“Now is not the time to stop investors from considering who’s
data could lead to better returns over the long term,” Frerichs
said. “The American economy depends on investors, please let us
do our jobs.”
Frerichs was behind a law that required investment managers of
Illinois public funds, including pension systems, to disclose
how they integrate environmental, social and governance
investment strategies.
ESG investing is experiencing pushback outside the U.S. as well.
A global survey by Amundi revealed that only 8% of pension funds
regard their asset managers as “excellent” when it comes to
achieving ESG goals on their behalf, and 14% of pension funds
are willing to sacrifice returns to meet ESG goals.
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