State Financial Officers on Biden Veto of Anti-ESG Bill
State Financial Officers on Biden Veto of Anti-ESG Bill • March 20, 2023
Today, President Joe Biden vetoed legislation that would overturn the U.S. Labor Department rule which permits retirement plan fiduciaries to consider environmental, social, and corporate governance risk factors when making investment decisions. Illinois, Maine, Maryland, Massachusetts, Minnesota, Oregon, Rhode Island, Vermont, and Washington’s financial officers released the following statements in response:
“President Biden’s first veto marks a victory for the pensions of millions of public employees across the nation and in Rhode Island. Fiduciaries are wise in assessing environmental and social risk factors to ensure that the livelihoods of the people who have contributed greatly to our nation is not compromised. Our teachers, firefighters, and state employees deserve a prosperous retirement,” said Rhode Island General Treasurer James A. Diossa.
“As a fiduciary for a pension system upon which over 400,000 retirees are relying, I must be able to actively manage the risk associated with investments we are making – including environmental, social, and governance risks. The President’s veto recognizes that these risks are real and rejects the attempt by some Republican elected officials to use the hard-earned pension dollars of our country’s retirees as a political football,” said Maryland Comptroller Brooke Lierman.
“Vermonters deserve the freedom to consider each and every risk when investing for a secure and prosperous retirement. I applaud President Biden for standing up for main street investors and preventing political ideology from being interjected into retirement investment decisions,” said Vermont State Treasurer Mike Pieciak.
“First responders, teachers, public employees, and taxpayers expect their elected officials to rise above the short-sighted politics that put their hard earned dollars at risk. Accountability for public investments is essential for the long-term stability of state and federal finances. Today’s veto by President Biden ensures that accountability. We can’t let corporate special interests put our collective future at risk in exchange for political profit,” said Washington State Treasurer Michael J. Pellicciotti.
“Good fiduciaries need to consider all risks and opportunities to protect the funds retirees count on. President Biden is right to stop attempts to play politics with our firefighters’, teachers’, and public employees’ pensions,” said Minnesota State Auditor Julie Blaha.
“Mandates limiting the consideration of material risk factors negatively impact competition, increase costs that will fall on taxpayers and public employees, and result in limiting opportunities for potential growth that benefits savers. Our goal is to mitigate risk so that we can honor the commitments that we’ve made to teachers, firefighters, and other public employees. We have zero time for anti-ESG political theater because we are focused – as all fiduciaries should be – on maximizing value over the long term,” said Illinois State Treasurer Michael W. Frerichs.
“President Biden is right to give modern investors the choice to consider long-term risks to the American people’s investments and retirement plans. Congress should focus on growing prosperity for all and not inject dated ideology against the wishes of individual investors and fiduciaries,” said Maine State Treasurer Henry E. M. Beck.
“The move to prevent investors from considering all the material risks that increase costs to taxpayers would profoundly limit the market’s ability to create value over the long term and will directly harm retirees and their families. I commend President Biden for standing up for the people of our country in the face of political pressure and special interests,” said Massachusetts State Treasurer Deborah B. Goldberg.
“For policymakers to mandate willful ignorance about an entire category of risk and punish private companies because they might not share the same ideology is un-American. I applaud the President for his veto,” said State Treasurer of Oregon Tobias Read.
If you’d like to speak with any of the state financial officers about the impact President Biden’s veto will have on the funds they oversee or the anti-ESG attacks more broadly, email Max Flugrath at Max.Flugrath@ForTheLongTerm.org.
The DOL Rule: President Biden’s veto of the legislation ensures that fiduciaries of funds governed by The Employee Retirement Income Security Act of 1974 (ERISA) can choose to consider environmental, social, and corporate governance (ESG) factors in their investment decisions — the rule does not mandate ESG consideration, but simply permits the information to be a factor in fiduciaries’ decision-making.
The Facts on ESG: Data about environmental social and governance (ESG) risk factors is widely used by investment managers, financial institutions, and corporations to understand additional risk factors that affect their investments. Often incorrectly equated with impact investing, which chiefly aims to generate specific beneficial social or environmental effects, the objective of using ESG data is to improve financial performance.
About For The Long Term: For the Long Term is a 501(c)(3) organization that supports state and municipal financial officers in leveraging the power of their offices to deliver long-term economic growth and prosperity for their beneficiaries, their constituents, and our country by advocating for more sustainable, just, and inclusive firms and markets. Learn more at ForTheLongTerm.org.
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