CHARLESTON – West Virginia State Treasurer Riley Moore has criticized a new U.S. Department of Labor rule that gives investment managers broader discretion to consider Environmental, Social and Governance (ESG) factors in retirement plan products.
“I’m extremely disappointed the Biden administration has rolled back President Trump’s rules that protected Americans’ retirement plans from unsound ESG investment practices,” Moore said in a December 1 statement. “The ESG and socially responsible investment trends are nothing more than a marketing gimmick used by liberal activists and firms like BlackRock to prop up political allies and favored social initiatives.”
Moore also said investment managers should strictly use objective financial metrics in their fiduciary decisions, which was required under a Trump-era rule.
“The subjective, political nature of ESG investing trends could present tremendous harm to consumers looking for sound retirement options,” Moore said. “The fact that now defunct crypto exchange FTX had higher ESG ratings than ExxonMobil exposes the clear flaws in this investing trend, and I’m worried Americans could be deceived into placing their retirement money into investment products that are promoted more for political factors than financial stability.”
Moore said Congressional leaders need to take action to roll back this rule.
“I hope Congress can step up and rein in this attempt to dupe Americans into using their retirement plans to fund woke social initiatives,” Moore said.
Earlier this year, West Virginia and other states passed resolutions requiring divestments from firms such as BlackRock that boycott fossil fuels. Also, 19 state attorneys general – including West Virginia AG Patrick Morrisey – wrote a letter to the Securities and Exchange Commission asking the agency to look into the firm's ties with China and whether it was skirting its fiduciary responsibility to investors.
The Department of Labor rule, which was announced November 29, reverses the 2020 Trump rule that required employers to prioritize profit when making 401(k) investments. It goes into effect in two months. Proponents of the new rule say it would allow companies to be more profitable, but critics argue asset managers now can use retirees' assets to advance the Democrats' political and social agenda without their approval.