Committee Democrats to Scalia: Stop Undermining Americans’ Ability to Make “Sustainable Investments”
In letter to Secretary Scalia, 21 Democrats call on Labor Department to withdraw proposal restricting the use of environmental, social, and governance (ESG) factors in retirement investments
WASHINGTON – In a letter to Secretary Eugene Scalia, 21 Committee Democrats expressed deep concern about the Department of Labor’s (DOL) proposed rule to undermine workers’ ability to invest responsibly when saving for retirement. The rule would needlessly restrict retirement plans for considering environmental, social, and governance (ESG) factors when making investment decisions.
In the letter to Secretary Scalia, the Members said the DOL failed to provide an adequate justification for overturning existing ESG guidance and could not cite any litigation or enforcement actions in which ESG factors were used improperly. The Members pointed out that the DOL also did not perform a thorough economic analysis to showing that the proposed rule was in the American people’s best interests. Instead, the DOL offered unsubstantiated claims and essentially told the public to “take their word for it” when it came to the rule’s benefits. The Members rejected that approach, believing that workers should be able to invest in a way that reflects their values without sacrificing financial returns.
“Amid the COVID-19 pandemic and a historic economic downturn, by proposing this rule, the Department of Labor is undermining workers’ ability to invest in a way that reflects their values without sacrificing financial returns,” the Members wrote. “The Department Labor failed to establish a problem that needs to be fixed or provide a data-driven rationale. The Department also failed to produce a rigorous economic analysis. Without such analysis, all Americans should share our concern and skepticism about the Department’s claim that the proposed ‘rule’s benefits would exceed its costs.’”
The proposal comes in the wake of a discernable uptick in ESG investments among retirement plans. U.S. mutual funds focused on sustainable investing attracted more than $20 billion in assets in 2019, a four-fold increase from the previous year.
The letter was led by Chairman Robert C. “Bobby” Scott (VA-03) and by Reps. Davis (CA-53), Grijalva (AZ-03), Courtney (CT-02), Fudge (OH-11), Sablan (CNMI-AL), Wilson (FL-24), Bonamici (OR-01), Takano (CA-41), Adams (NC-12), DeSaulnier (CA-11), Norcross (NJ-01), Jayapal (WA-07), Morelle (NY-25), Wild (PA-07), McBath (GA-06), Schrier (WA-08), Shalala (FL-27), Levin (MI-09), Omar (MN-05), and Trahan (MA-03).
To read the full text of the letter, click here.
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