Hearing conclusion: Wealth managers prioritize harmful ESG measures, putting Americans’ hard-earned money and energy security at risk – US House Committee on Oversight and Accountability

WASHINGTONThe Subcommittee on Economic Growth, Energy Policy and Regulatory Affairs and the Subcommittee on Health Care and Financial Services held a joint hearing titled ESG Part II: The Cascading Impacts of ESG Compliance to examine the impact of environmental initiatives , social and governance (ESG) policies on businesses, consumers and retirees. During the hearing, members examined how ESG measures are causing harm to retirees, pensions and the economy, impacting companies’ ability to make decisions in line with their duties to provide financial returns.

Key points:

Due to Democrats’ ESG push, the private sector is pursuing liberal policy goals at the risk of Americans’ hard-earned savings and retirement plans.

  • While branded as a well-intentioned investment strategy, ESG manipulates markets and market access to advance a leftist political agenda, Mandy Gunasekara, director of the Independent Women’s Forum’s Center for Energy and Conservation, She said in his opening remarks. ESG factors are also a contributing factor to high gas and electricity prices that hit low-income households the hardest, forcing some to choose between food or electricity.

ESG reporting requirements strain the ability of small businesses and consumers to afford products as they drive up prices, limit growth, keep companies out of business, cause job losses, and reduce revenues.

  • Divestment from politically disadvantaged industries, such as fossil fuels, improves a company’s ESG rating, but ESG’s preferred energy source is unable to meet US energy demand.
  • That’s why I refer to the ESG agenda as the China ESG agenda. It does little to help Americans. It does everything to help the Communist Party of China, and once again, by making energy expensive, scarce, and government-controlled, The Honorable Jason Isaac, director of Life:Powered at the Texas Public Policy Foundation, She said in its opening statement.

Wealth managers like Blackrock, Vanguard and State Street are breaching their fiduciary duty by pursuing political agendas and prioritizing ESG goals over profit. Members at the hearing discussed the need for greater corporate transparency.

  • When trust companies vote in favor of these ESG resolutions, they are violating their trustee, because these are not in the best interest of the shareholders, Stephen Moore, Distinguished Fellow in Economics at the Heritage Foundation, said in an opening statement.

Member Highlights:

Subcommittee Chair Pat Fallon (R-Texas) asked on the effects of investment fund managers who breach their fiduciary duty by pursuing political agendas at the risk of their clients’ pensions and pensions.

Fallon Representative: Do investors and fund managers have legal fiduciary obligations to their clients under federal law?

S. Moore: If people want to invest their money in ESG funds, [Congresswoman McClain]I couldn’t have said it better than you. It’s a free country. What I’m talking about in my testimony is that companies like BlackRock and State Street vote on these resolutions without their customers’ knowledge and approval.

Subcommittee Chair Fallon also discussed how ESG measures reduce capital flows to the energy sector and threaten America’s energy security.

Fallon Representative:Can we justify the green-at-all-costs approach that permeates not only the federal government, but now our financial systems?

M. Gunasekara: When we suppress those energy resources, that demand doesn’t go away. It’s just being transported overseas to places like China, India or Russia, which don’t set the same level of environmental standards that we do in this country, which ultimately undermines the environmental progress we’ve made in recent decades.

Fallon Representative: What should Congress be most concerned about when we think about ESG factors and the future of American energy?

The Honorable J. Isaac: Energy independence is probably the most important thing. While we continue to see this demonization from both financial institutions and politicians, these anti-American energy policies are damning.

Subcommittee Chair Lisa McClain (R-Mich.) asked on how ESG reporting requirements impose additional burdens on small businesses, limit growth, reduce tax revenues and result in higher prices.

Representative McClain: Is ESG a more efficient investment strategy?

S. Moore: The overwhelming number of studies show that ESG investing, just like any social investing technique, reduces your return, because you’re limiting the number of companies you can invest in.

Moore added: I can’t tell you how many people I’ve heard since we did our study saying, look, this is my retirement. I’ve worked all my life to buy a house in Florida or Arizona when I retire, and it’s costing me thousands of dollars. People are angry about it and they are angry that they didn’t know.

Rep. Jake LaTurner (R-Kan.) pointed out how prioritizing underperforming ESG funds jeopardizes Americans’ retirement savings.

LaTurner Representative: Can you briefly outline the financial liabilities my constituents’ Golden Year savings are exposed to under the Biden administration’s ESG standards?

S. Moore: The preponderance of studies show that ESG investing reduces investor returns. He added, Frankly, these companies have a fiduciary duty to provide them with the highest possible return.

LaTurner Representative: To your personal knowledge, are climate change activists using the threat of political action to pressure banks to lend to certain energy and industrial sectors, such as the fossil fuel industry?

S. Moore: Here’s the thing about that. The US economy cannot function without fossil fuels. So the idea of ​​eliminating fossil fuels in the next 20, 30 or 40 years is extraordinarily dangerous economically.

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