Roll Back Esg to Increase Retirement Earnings Act

Floor Speech

Mr. Speaker, I rise in opposition to H.R. 5339, the so-called Protecting Americans' Investments from Woke Policies Act.

This bill packages four separate bills that the Committee on Education and the Workforce reported on party line votes.

H.R. 5339 relates to what is known as environmental, social, and governance or ESG investing. Many of us believe that workers should be able to invest in a way that reflects their values, whether combating climate change or promoting health and labor standards, without sacrificing investment returns.

To be clear, this kind of investing is not at odds with making a profit. In fact, it makes good financial sense to carefully consider investments that account for a company's exposure to such liabilities as high liability risks, fossil-fuel-dependent business practices, or vulnerability to sea level rise, like whether or not an asset is going to be underwater in 15 years. It would be nice to know that, but you shouldn't be prohibited from even considering it. These are among the factors that could cause a stock to suffer over the long-term horizon. Considering that workers often contribute to their retirement accounts for decades before drawing down their savings, it makes perfectly good sense for those managing the workers' accounts to consider long-term impacts when making investment decisions.

ESG investment is a sound, profit-centered, risk mitigation strategy, and the financial services industry recognizes it.

For example, State Street Global Advisors, one of the largest asset managers, noted that, as a fiduciary, they have ``a duty to act prudently and in the best interest of our clients, which increasingly includes consideration of environmental, social, and governance factors relevant to the performance of the companies in which our clients invest.''

The Trump administration issued a rule that imposed needless barriers and onerous requirements related to ESG investing. Fortunately, the Biden-Harris administration reversed course and finalized a sensible rule clarifying that a plan's fiduciaries may consider ESG factors when they make decisions for retirement plan participants. Let's be clear, the rule is not a mandate.

H.R. 5339 codifies the Trump-era ESG rule. It also codifies the Trump-era rule that would disenfranchise plan fiduciaries from exercising their shareholder rights on behalf of workers.

The bill also undermines efforts to increase diversity among asset managers. This is a worthwhile endeavor, as the GAO noted a few years ago that only 1 percent of the $7 trillion in global assets under management are managed by firms owned by women or people of color.

There is also research to suggest that nondiverse firms do not outperform diverse firms across all asset classes.

In sum, H.R. 5339 takes us backwards and undercuts retirement professionals who are legally bound to make prudent decisions for workers and retirees.

Mr. Speaker, I urge opposition to the bill and reserve the balance of my time.

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