Congressional Republicans are following through with a campaign promise of reining in the Environmental, Social, and Governance (ESG) movement. 

Earlier in February, House Financial Service Committee Chair Patrick McHenry (R-NC) announced the formation of the Republican ESG Working Group. It will be headed by Rep. Bill Huizenga (R-MI) and consists of nine members. 

“Progressives are trying to do with American businesses what they already did to our public education system—using our institutions to force their far-left ideology on the American people. Their latest tool in these efforts is environmental, social, and governance proposals. This is why I am creating a Republican ESG working group led by Oversight & Investigations Subcommittee Chair Bill Huizenga,” said Chairman McHenry in a press release. “This group will develop a comprehensive approach to ESG that protects the financial interests of everyday investors and ensures our capital markets remain the envy of the world. Financial Services Committee Republicans as a whole will continue our work to expand capital formation, hold Biden’s rogue regulators accountable, and support American job creators.”

The Working Group’s stated goal is to protect everyday investors from threats posed by ESG while protecting the integrity of American free enterprise. These goals are increasingly important as savings are squeezed by poor economic conditions. 

Their three listed priorities include: preventing the Securities and Exchange Commission (SEC) from adopting Scope 3 emissions standards; maintaining the materiality standard for disclosures remains objective; and ensuring market participants don’t abuse the proxy process or inject non-pecuniary factors into financial decisions. 

The working group comes at an important time. 

The Department of Labor is the latest government agency to endorse ESG. A new agency rule will allow financial managers to weigh non-financial factors in retirement plans—further miring already strained 401(k) plans. 

I recently analyzed this at RealClear Markets, writing, “152 million Americans, or two-thirds of the U.S. population, will see their retirement funds—estimated to be valued at $10 trillion—jeopardized by ESG considerations. The primary goal of retirement plans, much like general investment strategies, is to maximize return on investments—not stray away from this intended goal. Adding stressors like ESG will threaten existing accounts with depreciating funds and create more unnecessary financial risk.” 

As more states adopt legislation to curb ESG, the House of Representatives can go on offense through this venue.

To get familiar with ESG, go HERE.