This website collects cookies to deliver better user experience. Cookie Policy
Accept
Sign In
The Wall Street Publication
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Reading: Joe Biden’s new 401(k) rule threatens to funnel workers’ retirement funds into ‘woke’ causes
Share
The Wall Street PublicationThe Wall Street Publication
Font ResizerAa
Search
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Have an existing account? Sign In
Follow US
© 2024 The Wall Street Publication. All Rights Reserved.
The Wall Street Publication > Blog > Trending > Joe Biden’s new 401(k) rule threatens to funnel workers’ retirement funds into ‘woke’ causes
Trending

Joe Biden’s new 401(k) rule threatens to funnel workers’ retirement funds into ‘woke’ causes

Editorial Board Published November 3, 2021
Share
Joe Biden’s new 401(k) rule threatens to funnel workers’ retirement funds into ‘woke’ causes
SHARE

A rule quietly proposed by the Biden administration would allow companies to consider factors such as climate change, diversity issues and even political donations when selecting employees’ 401(k) plans, potentially forcing workers to funnel some of their pay into woke causes.

The proposal explicitly directs retirement plan administrators and asset managers to consider environmental, social and corporate governance (ESG) factors when selecting investments.

That would require retirement plan sponsors to give as much weight to a fund’s support of liberal causes, such as donating to Black Lives Matter or building wind turbines, as they do to financial returns.

The Labor Department rule makes clear that “climate change and other ESG factors are often material” and should be considered “in the assessment of risks and returns.”

It also rescinds a Trump-era rule that requires administrators and asset managers to offer investment options solely in the financial interests of participants.

Under the proposed rule, announced late last month, administrators could enroll workers in ESG funds as a default if the employee does not select an investment option. Workers could unknowingly be supporting causes that don’t align with their political views.

If approved, the rule could affect the roughly 150 million workers and $10 trillion in assets covered under the Employee Retirement Income Security Act of 1974, or ERISA.

Critics say the rule would harm Americans’ retirement savings by allowing asset managers to sacrifice financial returns to promote liberal policy objectives.

“This is the latest example of how the political left works,” said Sen. Marco Rubio, Florida Republican. “They want to remake the entire country to comply with the latest woke agenda. And with this rule, the political left’s allies on Wall Street and corporate America will be free to do it with no recourse for the workers and retirees harmed by it.”

Mr. Rubio responded with a bill that would empower shareholders to sue corporations and executives if their business strategies deviate from their duty to maximize investors’ returns.

Democrats said the proposed rule gives workers the freedom to support social causes and that financially beneficial investments can also promote racial justice and combat climate change.

“Financial security is about planning for the future, so it’s just common sense that ERISA fiduciaries be allowed to consider the environmental, social and governance factors that are shaping the future. The Biden administration’s step to acknowledge this reality is a win for workers, retirees, investors, businesses, communities, the environment — everyone,” Sens. Patty Murray of Washington and Tina Smith of Minnesota said in a joint statement. “This new rule will help build a future for families that is more just, diverse, sustainable and financially secure.”

Ms. Murray, chairwoman of the Senate Health, Education, Labor, and Pension Committee, was one of the most vocal opponents of the Trump-era rule that strictly limited investment decisions to financial concerns.

Socially conscious investing has been a political yo-yo for years. Presidents Clinton and Obama tried to nudge the Labor Department toward ESG considerations, and Presidents George W. Bush and Trump sought to restrict it.

The rule in the works under President Biden would dramatically increase the inclusion of ESG options in investment plans because it gives plan sponsors more freedom to support those causes.

ESG investment has surged in recent years. The total assets under management by ESG funds reached $40 trillion last year, up from $22.9 trillion in 2016, according to data from Opimas LLC, a management consultancy business that advises financial institutions.

Globally, ESG assets are expected to exceed $53 trillion by 2025. That would account for more than one-third of the $140.5 trillion projected assets under management, according to research by Bloomberg Intelligence.

Asset managers charge higher fees for ESG funds, according to Morningstar Inc, a financial services company. Morningstar’s research found that the asset-weighted average expense ratio for “sustainable” funds in 2020 was 0.61%, compared with 0.41% for traditional funds. That difference could reduce an individual’s retirement savings by tens of thousands of dollars over a few decades.

Morningstar referred to the increase as “a greenium,” a pun on the high fees and funds’ climate change initiatives.

No hard data shows that ESG funds outperform traditional investment options, though supporters and detractors have sought to make a case for their sides.

A study by financial services giant Morgan Stanley found that ESG funds outperformed their peers by 4.3% last year. The company attributed the higher performance to a broader acceptance of ESG funds among asset managers.

Researchers at Edhec Business School in France concluded this summer that the ESG market has hit maturity and will soon peter out. They said companies will incur greater costs by trying to improve their environmental and social scores, which will lead to lower profits over the long haul.

Bill Flaig, the creator of an exchange-traded fund that offers investment products catering to conservatives, said ESGs are too expensive for unclear returns.

“From a purely economic standpoint, you are subjecting participants to higher fees that are not necessarily demonstrated to produce long-term results,” he said. “It’s the worst of both worlds.”

Still, institutional investment companies such as BlackRock Inc., the world’s largest asset manager, have pushed for more consideration of ESGs in recent years.

They say the Labor Department’s proposal levels the playing field for ESGs and brings retirement plans in step with the ways independent investors view the funds.

The American Retirement Association, the nation’s largest advocacy group of retirement plan professionals, said it “enthusiastically” supports the proposal.

“We are pleased that the DOL has established a level playing field for ESG investment considerations in retirement programs, consistent with ERISA’s requirement that plan fiduciaries’ decisions be first and foremost prudent, and in the best interests of plan participants and beneficiaries,” Brian Graff, CEO of the American Retirement Association, said in a statement.

The proposal is subject to a 60-day comment period that concludes Dec. 13.

Correction: An earlier version of this article incorrectly reported the amount of ESG assets expected by 2025. The amount is more than $53 trillion.

Sign up for Daily Newsletters

TAGGED:TrendingWall Street Publication
Share This Article
Twitter Email Copy Link Print
Previous Article TikTok Parent’s Founder Zhang Yiming Steps Down as Chairman TikTok Parent’s Founder Zhang Yiming Steps Down as Chairman
Next Article 3-D-Printed Bridges Promise Smarter, Greener Transit Links 3-D-Printed Bridges Promise Smarter, Greener Transit Links

Editor's Pick

JPMorgan unveils its 2025 summer season studying record

JPMorgan unveils its 2025 summer season studying record

JPMorgan Chase Chairman and CEO Jamie Dimon on the significance of management abilities, deregulation coverage, power independence and the Federal…

By Editorial Board 4 Min Read
2025 Summer time Guide Information: Discover your seashore reads right here
2025 Summer time Guide Information: Discover your seashore reads right here

Story first appeared in: Has studying books ever appeared extra important than…

23 Min Read
Man shot and killed on one hundredth Avenue in Oakland on Saturday
Man shot and killed on one hundredth Avenue in Oakland on Saturday

Oakland police are investigating the loss of life of a person, 34,…

1 Min Read

Oponion

Trump threatens even bigger tariffs on EU, Canada in the event that they work collectively to trigger ‘economic harm’ to the US

Trump threatens even bigger tariffs on EU, Canada in the event that they work collectively to trigger ‘economic harm’ to the US

FOX Enterprise contributor Katrina Campins joins 'The Huge Cash Present'…

March 27, 2025

Important shift as Starmer says Ukraine should be in ‘strongest attainable place for negotiations’ | Politics Information

Sir Keir Starmer has for the…

December 3, 2024

Elon Musk’s return drives Tesla inventory surge in Might

As President Donald Trump thanked Elon…

May 31, 2025

Andrew and Tristan Tate Formally Charged With Rape, Intercourse Trafficking

Studying Time: 3 minutes Because the…

May 29, 2025

Oh nice, one other ineffective fee to seek out nonexistent voter fraud

Interim D.C. U.S. Lawyer Ed Martin…

March 24, 2025

You Might Also Like

Tenvil Mackenson: Rebuilding Haiti, Brick by Brick
LifestyleTrending

Tenvil Mackenson: Rebuilding Haiti, Brick by Brick

In a country often entangled in instability and shadowed by accusations of corruption and criminal conspiracies, Tenvil Mackenson has emerged as a striking…

4 Min Read
Finding Voice Through Silence: The Story of OR GOLAN
LifestyleTrending

Finding Voice Through Silence: The Story of OR GOLAN

In a world where expression is often taken for granted, finding one’s voice can be an uphill battle—especially when that…

6 Min Read
The Landscape of International Trade in 2025: Constant Evolution and Strategic Shifts
TechTrending

The Landscape of International Trade in 2025: Constant Evolution and Strategic Shifts

The international trade landscape is in constant flux, and the year 2025 is no exception. According to expert Manoel Gil…

3 Min Read
Lara Rose’s Journey from Aspiring Trauma Surgeon to a Seven-Figure Earning Digital Entrepreneur
Trending

Lara Rose’s Journey from Aspiring Trauma Surgeon to a Seven-Figure Earning Digital Entrepreneur

You never know when a viral moment will change your entire life. That was certainly the case for Lara Rose,…

5 Min Read
The Wall Street Publication

About Us

The Wall Street Publication, a distinguished part of the Enspirers News Group, stands as a beacon of excellence in journalism. Committed to delivering unfiltered global news, we pride ourselves on our trusted coverage of Politics, Business, Technology, and more.

Company

  • About Us
  • Newsroom Policies & Standards
  • Diversity & Inclusion
  • Careers
  • Media & Community Relations
  • WP Creative Group
  • Accessibility Statement

Contact

  • Contact Us
  • Contact Customer Care
  • Advertise
  • Licensing & Syndication
  • Request a Correction
  • Contact the Newsroom
  • Send a News Tip
  • Report a Vulnerability

Term of Use

  • Digital Products Terms of Sale
  • Terms of Service
  • Privacy Policy
  • Cookie Settings
  • Submissions & Discussion Policy
  • RSS Terms of Service
  • Ad Choices

© 2024 The Wall Street Publication. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?