Washington Challenges ESG Investing

Targeting ESG

A new bill in Washington aims to challenge investing based on ESG (environmental, social, and governance) principles.

ESG investing has gained popularity over the past years, as investors were able to honor certain values while putting their money to work.

Profits Over Everything

The new bill, introduced by Kentucky Representative Andy Barr, aims to update the Employee Retirement Income Security Act to force retirement funds to prioritize profits over ESG goals. The bill would also require breakdowns of ESG funds’ performance and fees versus other funds, and require investors to be notified if their financial advisors invested in such vehicles.

This isn’t the first time that Washington’s lawmakers are targeting ESG: Earlier this year, Congress axed a Biden administration rule allowing fiduciaries to consider ESG factors when making investment decisions. President Biden ultimately vetoed that bill.

Earnings Over Environment

While the proposed bill seeks to put profits back at the center of the investing world, it doesn’t explicitly block investors from investing in ESG funds, and should it pass, financial advisors would still be able to invest in ESG funds. Whether the bill will make it that far remains to be seen.

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