Biden Comes to the Rescue of Woke CEOs with New Labor Dept. Rule
No three letters have gotten more attention in the Republican Party lately than ESG. The Left’s Environmental, Social, Governance investing scheme was quite the racket until recently, when conservatives started pulling back the curtain on woke Wall Street’s plans. Now that Americans are onto the three-headed monster of BlackRock, State Street, and Vanguard, it’s been harder for leftist asset managers to exploit people’s money for their radical agendas. But if Joe Biden’s Labor Department gets his way, that’s all about to change.
Under a new rule that just went into effect this week, companies like BlackRock have the green light to put ESG priorities — things like abortion, climate change, the LGBT agenda — ahead of turning a profit for people’s retirement plans. In other words, if a certain energy stock is performing well, activists like Blackrock’s Larry Fink would have the government’s blessing to ignore the client’s financial interests and invest in a company that aligns with Fink’s environmental goals instead.
There’s just one problem, 25 state attorneys general argue. It’s a violation of federal law. Woke companies can’t just decide to sacrifice a client’s financial wellbeing on the altar of their radical political agenda — especially when that client is an entire state pension fund. If the Biden administration has forgotten that, then the redder half of the country — Alabama, Alaska, Arkansas, Florida, Georgia, Indiana, Idaho, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, South Carolina, Tennessee, Texas, West Virginia, Utah, Virginia, and Wyoming — thinks it’s time for the courts to remind them.
In a lawsuit filed last Thursday, half of the country’s states are suing the Department of Labor for a rule that they believe “puts politics ahead of profits.” One of those plaintiffs, Texas’s Ken Paxton (R), joined Family Research Council President Tony Perkins on “Washington Watch” Monday to talk about the lawsuit and why it ought to matter to every hard-working American.
More than 45 years ago, Paxton pointed out, Congress passed a law to protect the country’s investors from unnecessary risk. It was called ERISA, the Employee Retirement Income Security Act, and it required firms like BlackRock to look at “financial interest only” and “to make sure that they’re maximizing their investors’ value,” Paxton explained. Now “you’ve got the Biden administration telling these fund managers … ‘No, don’t follow the law. … You can invest based on non-financial factors.’ This, to me, will make Americans poorer.”
Experts like Strive Asset Management co-founder Anson Frericks agree. “When we introduce these non-financial factors — things like telling energy companies to drill less oil or telling Disney to get involved in divisive social issues like parental rights in Florida — unfortunately it can have a bad effect on companies and their profitability.”
Basically, Perkins pointed out, Biden is telling the leftists overseeing these funds, “Put this guy’s interests in the back seat. In the front seat, what I want driving this is the woke agenda of corporate America.” It allows strangers to make a moral determination about where your money should go — without caring whether it will hurt your portfolio.
“We think it has devastating consequences,” Paxton warned. “Once you start down this path, it’s hard to undo some of the damage that’s going to occur to literally the 100 million people or more [who] are going to be negatively impacted. And it’s starting today. So we would love to get a stay [in court] and then ultimately some type of injunction until we have a chance to argue the merits of the case, which are pretty simple. There’s nothing in federal law that authorizes this. It’s exactly the opposite. Federal law says you can’t do this.”
While states gear up to fight the rule in court, Republicans in the House and Senate are teaming up blow up the policy legislatively. Senator Mike Braun (R-Ind.) and Rep. Andy Barr (R-Ky.) are introducing a Congressional Review Act that would cancel the rule and loosen ESG’s grip on the country. This whole approach, Barr railed, is “a cancer within our capital markets.”
It’s also devastating to state economies, Paxton acknowledged, especially in places like Texas “because it’s taking away investment from energy production and energy distribution, which means that consumers end up paying higher prices — and we become reliant on countries that may or may not be our friends, many of them not. And so it puts us in a very precarious position going forward, and it definitely puts our economic well-being at risk.”
Not if Republicans have anything to say about it. As Perkins pointed out, more and more conservatives are taking on Big Business, after years of walking the same path of smaller government and less regulation. “Now that they’ve bought into the Left’s social agenda and their environmental agenda, they’re hurting the economy. They are hurting t average Americans. And so, I think it’s time for the Republicans to roll up their sleeves and say, ‘You know what? Not anymore. You want to fight over this, we’re going to fight you.’”
Suzanne Bowdey serves as editorial director and senior writer at The Washington Stand.