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FreedomWorks Foundation Submits Comments on "Woke" Investing

Today, FreedomWorks Foundation filed a formal comment with the Department of Labor's Employee Benefits Security Administration (EBSA) opposing the Biden Administration's proposal to allow consideration of so-called "Environmental, Social, and Governance" (ESG) factors in choosing how to invest employees' pension and retirement funds. The comment argues that allowing ESG considerations in making investment decisions is both unwise, as ESG investments tend to offer lower returns and charge higher fees; and directly contrary to the Employee Retirement Income Security Act (ERISA), which requires investment managers (fiduciaries) of these employee funds to choose investments based solely on financial considerations. The full text of the comment is attached and can be accessed here.

“ESG investing”--investing to address “environmental, social, and corporate governance” issues rather than to maximize financial returns--is a growing trend among fiduciaries. These ESG funds are comprised of stocks of companies that (1) are not engaged in politically-disfavored industries such as fossil fuels and tobacco and (2) promote a far-left agenda such and race and sex quotas for hiring, employee training based on Critical Race Theory, and environmental extremism.

In 2020, the Trump Administration adopted a rule to make clear that ERISA requires fiduciaries to focus solely on enhancing returns. In its clarification of years of regulatory guidance, the Trump DOL effectuated the goal of ERISA: to protect and enhance Americans' retirement security, which Congress determined was the paramount--and worthy--social goal. According to the Constitution, Executive Branch agencies must implement the statutes Congress passes--not substitute their own ideas of "worthy" goals.

Overturning the Trump rule would swing the door wide open for fiduciaries to invest according to their own "woke" preferences, which many Americans disagree with. So many Americans saving for retirement will be unwittingly supporting political causes they oppose--at the expense of their retirement savings. Hard-working Americans who have scrimped and saved for retirement deserve better.

More than 600 activists submitted their own comments. Here are a few excerpts:

“Retirement funds are happening because hard working senior citizens sacrificed while working and providing for their families. Keep politics and government control and influence away from our funds. Do not encourage fund managers to direct our funds towards support of political agendas. This scheme almost appears to be unethical and more so criminal in nature. Please help protect the assets of multitudes of senior citizens from unscrupulous politicians and their nefarious schemes. Thank you for your consideration.” --Robert S., California

“Retirement funds should be invested solely on the basis of financial gain. Not social justice causes. We already have a retirement crisis in this country. Most people don't have nearly enough money saved to retire and social security is almost insolvent. Do not mandate that retirement funds must be invested based on anything other than what is best for a customer's financial gain.” --Jeff H., Arizona

"In other words, rather than act in their capacity as a fiduciary in their client's best interests and invest funds based on monetary considerations to maximize an individual's retirement, the Biden Administration is injecting politics into the process and wants these management entities to direct retirement funds to corporations that have embraced the extreme far left positions that this Administration and his party have embraced. This is counter to the fiduciary responsibility of these management entities and the federal government has no business imposing their political viewpoints and opinions in this arena. This is akin to FORCING the democrat party's ideology onto individual retirement savings to advance the radical left's agenda! The administration should be ashamed of this intrusion into this arena, virtually asking financial managers to go against their fiduciary responsibility to their clients in order to play ideological politics with the retirement funds of Americans.” --Christine G., Arizona

“The only responsibility an investment manager should have is to make the best return on the investment they can for their clients. To do otherwise can only lead to bad outcomes. It sets up all kinds of possibilities for unintended consequences, such as investing with an eye toward a political outcome, which could be disastrous for retirees and our country.” --Kermit B., North Carolina