Proposed rule from Labor Department would discourage financial advisors from considering how investments accomplish environmental, social, and governmental (ESG) good
Labor Department proposal ignores findings that show ESG investments outperform traditional investments
Senator Murray: “We know that by focusing on the ‘triple bottom line’—profits, people, and the planet—financial advisors can, and already do, help their clients do well while doing good.”
(Washington, D.C.) – Today, U.S. Senator Patty Murray (D-WA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee released the following statement in response to a new proposed rule from the Department of Labor which would discourage financial advisors from considering environmental, social, and governance (ESG) criteria—for example whether investments that are financially beneficial also promote racial justice, address climate change, or protect human rights.
“We know that by focusing on the ‘triple bottom line’—profits, people, and the planet—financial advisors can, and already do, help their clients do well while doing good. A rule like this, which chills investments that take into account valuable qualities like diversity or sustainability, isn’t about protecting retirees.
“What would actually protect retirees, is a strong fiduciary standard to prevent unscrupulous actors from putting their own interests ahead of their clients—like the one the Trump Administration gutted.”
Despite the fact that financial advisors can, and already do, consider ESG factors while meeting their fiduciary obligations, Secretary Scalia incorrectly suggested that ESG vehicles perform worse than non-ESG investments. In fact, there is evidence that investments based on environmental, social, and governance goals not only provide comparable returns and potentially lower risk to traditional funds, but actually have outperformed such traditional investments in the past several years.