It will be very hard for DOL to make the case that raising ESG concerns is anything but a returns-based fiduciary calculation, but it is still extremely disappointing to see the level of corruption reach so deeply into the government.
President Donald Trump ordered the Department of Labor to see whether retirement plans engaging with energy companies on ESG issues comply with ERISA. The White House said in a statement that the executive orders are designed “to address regional and local energy supply constraints and to promote an efficient energy market.”
The ERISA review portion of the order notes that “companies owe a fiduciary duty to their shareholders to strive to maximize shareholder return, consistent with the long-term growth of a company.” That section also calls on the Labor secretary to review guidance on proxy voting “to determine whether any such guidance should be rescinded, replaced or modified to ensure consistency with current law and policies that promote long-term growth and maximize return on ERISA plan assets.”
Mindy Lubber, CEO and president of non-profit sustainability group Ceres, said in a statement that the executive order was “misguided… Investors know that working with companies on disclosure and integration of these risks into their businesses is a way to help preserve investment value for shareholders.”
“The data are clear: companies with strong disclosure and integration of these risks perform better financially — for the benefit of their shareholders,” Ms. Lubber said.
The executive order addresses regulatory barriers to financing new energy infrastructure. Mr. Trump directed the Environmental Protection Agency to update “outdated guidance” on the Clean Water Act and the Department of Transportation to update its regulations on natural gas development.
The order makes it harder for states to block pipelines and other energy projects by stating that “any decision to issue or deny a permit shall be made solely by the president.”
New York Gov. Andrew Cuomo in a statement called the order “a gross overreach of federal authority that undermines New York’s ability to protect our water quality and our environment. Any efforts to curb this right to protect our residents will be fought tooth and nail.”