At the beginning of March of 2023, your Congress, the U.S. House & the U.S. Senate, both passed legislation that makes null and void the Biden administration’s mandate that investment companies, nationwide, consider ESG standards when evaluating investments for their clients. This legislation is heading to the White House where President Biden has vowed to veto it. The veto, if not overridden by both houses of Congress, would allow the ESG mandate imposed by the U.S. Department of Labor to remain in place.

What the heck is ESG? In short, it stands for environmental, social and governance. So, the new Labor Department rule (not a law passed by Congress) tells investment companies that they should look at a company’s ESG behaviors to screen for their potential investments. OK I get it now. This is why we have seen our nation seem to move at lightning speed towards “woke” policies. This is why we now see almost every TV commercial make some social or environmentally friendly statement, notwithstanding the product line. ESGs are important now to the investment world so -- says the federal government. Investment companies use ESGs, which are non-financial factors, in investment decisions. This means they are factoring in social accountability. Companies now need to have a desirable ESG rating in order to be considered investment worthy. Never mind their financial status or product or financial reliability.

If a company wants an investment firm to buy its stock, then it needs to have environmentally friendly policies. So, the company will begin to issue favorable climate change statements from their board of directors. They now need to make statements about safeguarding the environment. Remember, they want their ESG rating to be high!

They will need to begin to speak about social justice in America, and how well they manage relationships with their employees, suppliers, and the community around them. Even though their product might be a bar of soap! How that bar of soap comes into being must now have an emphasis on social justice. Hence the TV commercial with a politically correct racial mix of actors using the bar of soap. This TV commercial is designed to help project the company's ESG rating so it is will now be on the rise. The soap company is in essence promoting itself to be able to say: “pick me, pick me” to the investment world.

The company will need to pass the litmus test in their governances. So, they hire employees that consist of a variety of races, ethnicities, or gender leanings. Never mind that their employees already reflect the community in which their product is produced. After all, they want to be picked by the investment boards that might invest large state teacher’s retirement funds. They want to be considered by mutual funds and brokerage houses because those firms now want investment products that employ ESG principles.

Remember, the practice by investment firms considering companies’ ESG has nothing to do with the company’s financial health or sustainability. It is based on the company’s self-professed feelings and statements touting their ESG accomplishments.

Let’s look at it this way. If an investor wants to invest his/her money in a highly rated ESG company, that is their prerogative. Same goes for a faith-based investor wanting his/her money to be invested in a company that promotes like-minded values. This is what the First Amendment to our Constitution is all about. But to promote one value over another, nationally, and mandated in regulation by our federal government, screams of scale-tipping. This paints a picture of our scales of justice being weighted down on one side instead of evenly balanced.

Also, is this good for the financial health of America? On paper it might sound like a good thing. In practice, when investing money, whether it is a small personal account or large public pension funds, the variables should be a company’s financials, market position, industry trends, management skills and debt financing, just to name a few. Requiring the investment world to begin considering investment opportunities with companies that self-profess their social policies, either conservative or liberal, seems to be dangerous financial policy and thinly veiled Marxism to this writer.

Elizabeth B. Chryst (formerly Letchworth) was the first woman, and youngest when elected by the United States Senate to serve as the U. S. Senate Secretary for the Majority for the Republicans. (source: S. Res. 8, 104th Congress, 1st Session)

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