State & Local Financial Officers Applaud 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.

For The Long Term released the following statement from a coalition of state and municipal financial officers in response. The financial officers who have signed this statement oversee hundreds of billions of dollars of assets under management that provide for millions of beneficiaries — including law enforcement officers, teachers, first responders, and other public employees.

“We applaud President Biden for blocking Congress’ attempt to stop common sense approaches that deal with the risks threatening retirees’ savings. Everyone deserves the freedom to protect their investments from all too frequent extreme weather events, corporate corruption, and bad business decisions commonly known as environmental, social, and governance (ESG) risks.

“The idea that Americans should trust their retirement savings to the judgment of the angriest and most volatile politicians instead of unemotional investment professionals defies common sense. Labeling serious investment strategies as ‘woke’ is simply irresponsible. To properly fulfill their fiduciary duty, successful investors must gather all available information about what can impact their investments — ESG is simply more information. That is why there is so much demand for ESG data.

“Americans elected President Biden to end the cycle of anger. We are thankful he continues to hold the line against those who stoke false outrage about well-established risk management practices. The overwhelming majority of Americans have had enough of this manufactured volatility – especially as it concerns the money they have saved for their families’ education and their retirement.”

Signed:

California State Controller Malia M. Cohen

Colorado State Treasurer David L. Young

Delaware State Treasurer Colleen C. Davis 

Massachusetts State Treasurer and Receiver-General Deborah B. Goldberg 

Nevada State Treasurer Zachary B. Conine 

New York City Comptroller Brad Lander

Vermont State Treasurer Michael S. Pieciak 

Washington State Treasurer Michael J. Pellicciotti*

*Washington State Treasurer Pellicciotti has signed on solely in his official capacity as a state treasurer.

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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