Biden administration reverses Trump-era rule on ESG retirement investments
SIMONE DEL ROSARIO: THE LABOR DEPARTMENT IS CLEARING A PATH FOR PEOPLE TO CONSIDER CLIMATE CHANGE AND OTHER ESG FACTORS WHEN CHOOSING RETIREMENT PLANS, REVERSING A TRUMP ERA RULING THAT RESTRICTED FINANCIAL FIRMS TO ONLY CONSIDER HOW INVESTMENTS PERFORM.
ESG INVESTING PURPORTEDLY SCREENS COMPANIES FOR POSITIVE ENVIRONMENTAL, SOCIAL AND GOVERNANCE ACTIONS.
BUT THERE’S HEATED DEBATE IN CORPORATE AMERICA OVER WHETHER ESG PRIORITIES HELP OR HURT THE BOTTOM LINE.
KIM GRIEGO-KIEL, HORIZONS SUSTAINABLE FINANCIAL SERVICES: companies that treat their employees better, that take care of the environment, that have women in the C suite, all tend to perform better.
VIVEK RAMASWAMY, FOUNDER, STRIVE ASSET MANAGEMENT: claiming that this is about long run shareholder value claiming that this is about preparing for an energy transition, i think that those tautologies though have been used as vehicles to advance agendas whose primary motivations were not at all oriented toward maximizing shareholder value in the end even though they’re disguised in that language.
SIMONE DEL ROSARIO: AND JUST AS THE LABOR DEPARTMENT MAKES THIS CHANGE, THE SEC IS CRACKING DOWN ON FUNDS CLAIMING TO BE ESG.
THE SEC FINED GOLDMAN SACHS FOUR MILLION DOLLARS FOR FAILING TO FOLLOW THE COMPANY’S OWN ESG POLICIES, NOTING THAT FOR MORE THAN A YEAR, THE COMPANY DIDN’T HAVE ANY WRITTEN POLICIES AND PROCEDURES FOR ESG RESEARCH BEFORE MARKING A FUND ESG, AND ONCE ESTABLISHED, FAILED TO FOLLOW THEM CONSISTENTLY UNTIL 2020.
ESG HAS INCREASINGLY BECOME A GRAY AREA AS IT GROWS IN POPULARITY, GIVEN THERE ARE NO FEDERAL GUIDELINES DECLARING A STANDARD FOR ESG.
FOR NOW, COMPANIES ARE TASKED WITH SETTING THEIR OWN PRACTICES FOR DETERMINING ESG FACTORS BEFORE SLAPPING A LABEL ON A FUND.
I’M SIMONE DEL ROSARIO IN NEW YORK IT’S JUST BUSINESS.