Senator Joe Manchin III is stepping up his attacks on corporations and financial firms that embrace environmental, social and governance investing, as the ESG movement also suffers setbacks in corporate boardrooms.
Once quiet on the burning issue, the West Virginia Democrat has increasingly focused on investment strategy that makes fighting climate change a top consideration.
Mr. Manchin insisted to The Washington Times in a recent interview that his warning that ESG harms energy security when geopolitical risks are ignored was “not to criticize ESG” or the responsibility to address climate change. But he has begun to sound more like his fellow Republicans who call ESG “woke capitalism.”
“Colleges, universities, you have different investment firms: they only look at ESG and not geopolitical risks. they are not being reasonable [or] practical,” Manchin said. “If you hang your hat on one thing, without the geopolitical risks, just ask Europe what happened.”
Mr. Manchin, who is chairman of the Senate Committee on Energy and Natural Resources, joined a Republican-led effort to strike down President Biden’s climate-friendly 401(k) rules that allow retirement fund managers to consider ESG, as first reported by The Times last month, a move that could force Biden to cast his first veto.
“At a time when our country is already facing economic uncertainty, record inflation, and rising energy costs, it is irresponsible of the Biden administration to jeopardize the retirement savings of more than 150 million Americans for purely political purposes.” Manchin said earlier this month. .
His anti-ESG rhetoric comes amidst diversity, equity and inclusion workers, components of ESG, who are on the chopping block in recent layoffs at US companies. Between December 2021 and December 2022, the attrition rate for these DEI workers was 33% compared to 21% for non-DEI workers, according to workforce analytics firm Revelio Labs.
Mr. Manchin remains an outlier for Democratic leaders who overwhelmingly back ESG. Meanwhile, Republicans in state capitals and on Capitol Hill are working to combat the takeover of pension funds and corporate culture.
When lawmakers return next week from the Presidents’ Day recess, Manchin and the Senate’s 49 Republicans plan to force a vote on a Congressional Review Act resolution to dismantle new Labor Department rules that allow managers financiers use ESG to invest clients’ retirement money.
The vote will only require a simple majority to pass, meaning one more Democrat is needed to pass it. The Republican-controlled House already has the votes.
Potential defectors in the Senate, such as Democrat Jon Tester of Montana and independents Angus King of Maine and Kyrsten Sinema of Arizona, both in caucuses with Democrats, are keeping their cards close to the vest. The trio is up for re-election next year and each is crucial for Senate Democrats to retain a majority.
“If people want to make their own decisions about how to invest, that’s one thing. But if it’s a fund of other people’s money, I think its role is to maximize return, not affect social policy,” King told Bloomberg News.
Biden officials insist that criticism from Manchin and Republicans is misplaced because the new 401(k) regulation, which rolls back Trump-era restrictions on ESG, does not mandate how to invest.
“The intent was to level the playing field and make it clear that trustees can look at those factors, but, at the end of the day, they can’t sacrifice risk or return,” Labor Under Secretary Lisa Gomez said at a meeting recent from the American Bar Association. webinar “Those are the basics of prudence and loyalty”.
Senate Majority Leader Charles E. Schumer said Congress should reject the crusade against ESG.
“Fart-right lawmakers are up in arms trying to stop investment funds from working with money managers who dare the egregious offense of looking at the big picture when investing, including how climate change and other problems can be prevented and present financial risks.” said Mr. Schumer, a Democrat from New York. “The far-right MAGA Republicans, who deny climate change, are trying to shield those companies from ideological exemptions and trying to embrace them for their own good and for the good of the country.”