(USNewsMag.com) – In an appearance on “America’s Newsroom” on Fox News, Senator Joe Manchin warned of the dangers of President Biden’s ESG investment rule.
ESG, or environmental, social, and governance, has swept through the business world. The non-financial assessment is used primarily by investors and asset managers. The more conscious a company is of its impact in these categories, the higher its score. Companies that do business with companies that have a low ESG score could see their own score drop. The desire to maintain a high ESG score has led to large financial institutions refusing to invest in fossil fuels or do business with gun manufacturers.
The Biden Administration’s rule, first announced by the U.S. Department of Labor on November 22, 2022, allows plan investments like 401K retirement plans to use ESG in their consideration when deciding where to invest. The rule removed restraints that prevented retirement plan fiduciaries from investing based on ESG factors that had been put in place during former President Donald Trump’s administration.
West Virginia’s Manchin warned that ESG is not without risk. By focusing heavily on environmental factors, investment in fossil fuels will drop before there is a genuine replacement for the energy currently produced through coal, gas, and oil. He also pointed out that the United States has already reduced emissions by an amount greater than any other country, and that a lack of energy security creates geopolitical risks. Speaking specifically about Biden’s new investment rule, he said that it puts our economy at risk because the market is not ready to replace fossil fuels yet, and avoiding investments that are not deemed environmentally friendly will jeopardize returns on investments for retirees.
ESG is widely considered to be a social credit system for businesses that will “keep business people in line with the narrative” according to former investment banker Carol Roth. Elon Musk is not a fan of ESG either. He has made several statements about the scoring system, once calling it “the Devil,” and more recently tweeting “the S in ESG stands for Satanic.”
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