November 14, 2022

Dear Senators and Members of Congress: 

Environmental, social, and governance (ESG) investing is a dangerous trend infecting the financial sector. While the ever-shifting definitions, applications, and scoring metrics are constantly being rewritten to incorporate the cause-du-jour, the financial harm to vulnerable groups–including retirees and pensioners–is very real.

Recent reports have underscored the financial consequences of the ESG scam. University of  Chicago researchers analyzed the Morningstar sustainability ratings of more than 20,000 mutual funds representing over $8 trillion of investor savings. The report found that “although the  highest rated funds in terms of sustainability certainly attracted more capital than the lowest  rated funds, none of the high sustainability funds outperformed any of the lowest rated funds.” Another analysis comparing one of the leading ESG funds to the S&P 500 found that, as of mid-2022, the ESG fund was down 23.7% vs. 20% for the S&P 500 index. These reports demonstrate  ESG funds are little more than Wall Street marketing gimmicks rebranding low-performing  virtue-signaling corporations as a “sound investment.”  

The truth is these losses are adding up and hitting the pocketbooks of Americans who have spent years working hard, building up savings, and planning for a reliable amount of returns in the future. Asset managers gambling with their hard-earned money is not only financially damaging, but likely an illegal betrayal of financial trust.  

The Employee Retirement Income Security Act (ERISA) has made it unlawful to sacrifice the  financial interests of beneficiaries for other interests aimed at advancing a “particular social cause.”  Over 44 states have adopted legislation modeled after ERISA, including Kentucky, where the Attorney  General issued a memo finding that ESG investing practices that “introduce mixed motivations to investment decisions” are inconsistent with the state’s law governing fiduciary duties.

Legal analysts have also suggested that the practice of boycotting certain types of companies and industries could constitute an illegal collusion against politically-targeted businesses in violation of federal antitrust laws. Perhaps the most concerning are the attacks on domestic energy producers, which ironically are some of the best-performing companies of 2022.  Divestment from oil and gas companies is undercutting our grid stability and broader energy security. Domestically this has led to higher energy prices fueling inflation while also leaving our international allies to rely on nefarious actors like Russia for access to energy. Adding insult to injury, ESG metrics have rated certain foreign-owned energy companies tied to egregious human rights and environmental violations higher than U.S. oil and gas companies.

One analysis revealed that the social scores have been good for the diversity business, but not effective in terms of creating actual diversity within corporations. Google, for example,  reportedly spent $114 million on its diversity program in 2014, but its diversity report in 2022  showed that Black employees make up just 5.3% of the workforce and 4.7% of leadership roles. 

Other companies seem to incorporate diversity language solely for marketing benefit. Two prominent case studies exposing this practice come to mind. In one reported case, Wells Fargo employees interviewed “diverse” candidates after the position had already been filled. In another, a former Miami Dolphins head coach has alleged the New York Giants attempted to circumvent a diversity requirement in the Rooney Rule by holding a “sham interview” with him three days after it was promised to another candidate.

As policy leaders planning for the next congress, we urge you to consider using your oversight  responsibilities to shine a light on this damaging trend, including assessments of the following  issues:  

1. Legal implications of ESG investing including possible violations of fiduciary duties and antitrust laws.  

2. ESG’s negative impact on energy independence and national security. 

3. How ESG is being used to justify poor business performance or cover for poor labor and environmental compliance records. 

4. Financial losses for retirees and pensioners due to ESG investing.  

5. The prevalence of marketing over measured outcomes, such as “greenwashing”. 

6. How ESG creates division in the workplace by forcing controversial “anti-racism” training on employees.  

7. The impact of gender-based quotas that reek of tokenism and affirmative action and can perpetuate harmful stereotypes such as women needing special treatment to succeed.  

8. ESG’s increasing alignment with a woke agenda embraced by many Democrats including the mobilization of dangerous political campaigns like “defund the police”. 

9. Attempts by administrative agencies to mandate ESG standards via regulatory fiat without a clear grant of Congressional authority. 

10. Whether foreign governments are funding ESG campaigns to undermine American competitiveness and economic strength. 

11. Assessing state actions by Attorneys General and financial officers aimed at protecting local citizens as well as business and consumer interests from ESG.

12. Developing policies that will protect American investments from virtue signaling schemes and maximize tangible financial value.  

As more Americans learn about ESG, they are catching on to its harmful outcomes and looking for ways to push back. One poll asking who—asset managers or individual investors—should decide whether retirement funds and pension plans are allocated towards ESG criteria found that 66% supported the right of individual investors to opt out of ESG-style investments. Only  20% supported deferring to asset managers.

Accordingly, the below signatories stand ready to assist your oversight and policy development goals.  


Heather R. Higgins
Independent Women’s Voice

Mandy Gunasekara
Senior Policy Analyst
Independent Women’s Forum

Jerry Simmons
Domestic Energy Producers Alliance

Carrie Lukas
Independent Women’s Forum

Jessica Anderson
Executive Director
Heritage Action for America

Richard Morrison
Senior Fellow
Competitive Enterprise Institute

The Honorable Jason Isaac
Executive Director
Life: Powered, Texas Public Policy Foundation

Tom Pyle
President Senior Fellow
American Energy Alliance

Dr. David Brat
Former Congressman

Scott Shepard
Director, Free Enterprise Project
National Center for Public Policy Research

James Taylor
Heartland Institute

Craig Richardson
Energy & Environment Legal Institute

Bette Grande
CEO, PresidentFounder
Roughrider Policy Center

Jeffrey Bossert Clark
Senior Fellow and Director of Litigation
Center for Renewing America

Adam Brandon

Benjamin Zycher
Senior Fellow, American Enterprise Institute
(for identification purposes only)

Kevin Freeman
NSIC Institute

Donna Jackson
Director, Membership Development, Project 21
National Center for Public Policy Research

Craig Rucker

E. Calvin Beisner, Ph.D.
Cornwall Alliance for the Stewardship of Creation

John Droz, Jr.
Alliance for Wise Energy Decisions