[Congressional Record Volume 169, Number 39 (Wednesday, March 1, 2023)]
[Senate]
[Pages S550-S556]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
LEGISLATIVE SESSION
______
PROVIDING FOR CONGRESSIONAL DISAPPROVAL UNDER CHAPTER 8 OF TITLE 5,
UNITED STATES CODE, OF THE RULE SUBMITTED BY THE DEPARTMENT OF LABOR
RELATING TO ``PRUDENCE AND LOYALTY IN SELECTING PLAN INVESTMENTS AND
EXERCISING SHAREHOLDER RIGHTS''
The PRESIDING OFFICER. Under the previous order, the Senate will
proceed to legislative session and proceed to the immediate
consideration of H.J. Res. 30, which the clerk will report.
The senior assistant legislative clerk read as follows:
A joint resolution (H.J. Res. 30) providing for
congressional disapproval under chapter 8 of title 5, United
States Code, of the rule submitted by the Department of Labor
relating to ``Prudence and Loyalty in Selecting Plan
Investments and Exercising Shareholder Rights''.
The PRESIDING OFFICER. The senior Senator from Hawaii.
Mr. SCHATZ. Madam President, there is a group of elected officials in
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our country today who are engaged in an anti-capitalist crusade. But
they are not socialists; they are mostly congressional Republicans.
This CRA is gross government overreach on U.S. capital markets. It is
designed to prevent pension plans from pursuing environmental, social,
and governance--or ESG--investing. But make no mistake, it is only the
latest step in a campaign to prevent American financial institutions
from making money from the clean energy revolution, and it should
offend anyone who supports free markets.
The reason this is happening is that the fossil fuel industry faces a
risk wall, where the risks associated with climate change are clear
enough that retirement plan sponsors may want to consider them when
investing assets. The Trump administration banned them from doing so,
implementing a rule that pension fund managers couldn't consider ESG
investing. The Biden administration's rule merely reverses this ban,
going back to a neutral stance--going back to be a neutral stance. It
is not telling them to do environmental, social, and governance goals;
it is just saying: Do whatever you want. It is none of our business.
The Federal Government has no business in determining how pension funds
deploy their resources.
But rather than own up to the risks or reduce their emissions, the
fossil fuel industry is trying to remove climate-related elements from
risk consideration, and the Republican Party is helping.
This closely coordinated effort is being driven by a network of dark
money organizations fronting for climate denial groups. One attacker of
ESG investing is the Rule of Law Defense Fund--the political arm of the
Republican State Attorneys General Association, which urged people to
come to the Capitol on January 6 and aid in the attempted overthrow of
our democracy.
This dark money helps to win elections, and the fossil fuel industry
is becoming more aggressive because of the increase in green investing.
Right now, more than $8 trillion in U.S. assets is under management
employing sustainable investing strategies. ESG investing is expected
to represent more than 20 percent of all global assets in the next 5
years, and this growth is occurring for one simple reason: It is
profitable. It is profitable.
Some asset managers are pursuing sustainable investing at the behest
of their clients. Others have determined sustainable investing fits a
long-term strategy to grow retirement savings. Any plan sponsor
considering sustainable investing is simply meeting the moment.
But here is the real point: It is their call. It is not our call.
That is just capitalism in action, and the climate deniers are getting
their butts kicked in the free market, and they are mad about it, and
so they want to make a law to stop the bleeding.
Imagine an elected official telling an investment firm they can't
offer large cap or small cap or emerging market funds or funds even
that are exclusively for fossil energy. That would be preposterous.
Why? Because people get to decide how to deploy their resources, and
pension funds get to decide how to deploy their resources. But
Republicans have decided that for this issue and only this issue, we
should be telling pension fund managers how they can and can't invest.
The real reason for this is the Inflation Reduction Act has made it
so profitable to invest in clean energy that they are losing, and they
want an intervention from the Congress, so they decided to categorize
ESG investing as something nefarious, as something tricky, as something
woke. Come on. They are just losing. People don't want to invest in
fossil fuel anymore, and so they are asking the Congress to intervene
on their behalf.
This is not how the free market should work. If this passes, it will
force financial firms to punish Americans on behalf of the fossil fuel
industry. We cannot be intimidated. We have to reject this.
I yield the floor.
The PRESIDING OFFICER. The senior Senator from Massachusetts.
Ms. WARREN. Madam President, I rise today in opposition to Republican
efforts to nullify the Department of Labor's rule that protects
retirees and affirms decades of precedent. This rule allows those
investing retirees' savings the freedom to direct those funds where the
retirees want them to go. It lets them protect those funds from costly
risks posed by worsening environmental disasters or unsafe and unfair
working conditions and seek out promising, sustainable, long-term
investment opportunities.
Republicans' latest front in their wholly made up culture war is an
attack on ``woke capitalism,'' and American retirees are apparently
their targets. In particular, Republicans have set their sights on
retirees who choose to invest their money with environmental, social,
and governance--ESG--factors in mind.
Now, investors have actually been doing this for decades. The
Department of Labor has repeatedly said that under the Employment
Retirement Income Security Act of 1974, known as ERISA, retirement plan
managers may consider all--all--relevant economic factors when making
investment decisions if it is in the best interest of the plan's
participants. That includes ESG factors, like how a company treats its
workers or whether the company is sufficiently protected from climate
risks and whether the company respects human rights.
It turns out, investors really want to know these things. You don't
need to be a financial wizard to realize that whether a company invests
in its workers or is vulnerable to climate risks might be relevant to
the company's long-term prospects and the potential returns on your
investment.
But the Trump administration put blinders on investors when, in 2020,
it finalized a rule limiting that and made it harder for retirees to
invest with ESG considerations in mind. In 2022, the Biden
administration Department of Labor rightfully removed these roadblocks
and affirmed that retirement fiduciaries have the option to consider
ESG factors when making investments on behalf of retirees.
Let's be very clear about what this rule does not do. It does not
mandate anything. It does not require that fiduciaries invest or not
invest in certain funds. It does not tell fiduciaries to consider or
not to consider certain factors. There is nothing new here and
certainly nothing extreme.
Let's be clear. By overturning the Department of Labor's rule,
Republicans want to tie investors' hands and override the free market.
This fight isn't about protecting and strengthening Americans'
retirement security. It is not about ensuring that retirement plan
fiduciaries are making sound financial investments. And it sure as heck
is not about capitalism. It is politics, plain and simple.
How do I know that? Well, Republicans clearly believe that investment
decisions should be made with consideration of ESG factors so long as
they are ESG factors that the Republicans support. My colleague Senator
Rubio has championed legislation that would prevent Federal Government
employees' retirement assets from being invested in Chinese and Russian
companies.
At the same time, Republicans also seem to believe that government
shouldn't restrict investors' ability to put their money wherever they
want. In response to the Department of Labor's very sensible guidance
warning about the financial risks of investing in crypto scams, my
colleague Senator Tuberville introduced a bill that would prohibit any
guidance that would limit the type of investments that workers can
make. He said:
The government has no business standing in the way of
retirement savers who want to make their own investment
choices.
So add up what the Republicans have already told us with the
legislation they are sponsoring. Retirees should have the freedom to
invest their hard-earned money in crypto scams, but they should not
even be allowed to consider whether a company relies on child labor or
is polluting the planet or is underpaying its workers when deciding
whether or not an investment is sustainable. It just doesn't make any
sense, and it is not supposed to.
There is a bigger picture here that Americans need to understand.
Republicans know that President Biden will veto this resolution the
minute it hits his desk. They know it won't succeed in nullifying the
Department of Labor's rule. So what is the point of doing this?
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Well, Republicans have been explicit that the goal of this exercise
is to help their buddies in the courts. President Trump appointed
judges across the country who are now engaged in a disturbing assault
on the regulatory state and are hell-bent on kneecapping any effort to
make markets fairer, to make workers safer, and to make the environment
cleaner. This resolution is just one more attempt by Republicans to
give an assist to these extremist judges and make it easier for the
courts to overturn the rule and undermine the law.
Let's call this attack on the Department of Labor's rule what it
really is--a wholly invented grievance to advance corporate special
interests, not the interests of retirees.
Democrats need to stick together on this and reject these cynical
efforts to undermine investor protection and empower extremist
Republican courts.
I yield the floor.
The PRESIDING OFFICER. The junior Senator from Minnesota.
Ms. SMITH. Madam President, I appreciate my colleagues' remarks
today. You know, the issue that we are debating is whether or not
retirement plans should be allowed to consider a company's
environmental, social, and governance goals when they make investments.
That is ESG, and it is pretty simple.
My colleagues and I say that people who make investments for
retirement accounts and pensions plans may--they don't have to; they
may--consider ESG in their decisions about what stocks to buy so long,
of course, as they adhere to their principal fiduciary responsibility,
which is to put the financial best interests of their clients first.
Now, on the other hand, our Republican colleagues are saying: No,
retirement plans can't consider ESG goals. They are somehow claiming
that this rule will undermine free and fair markets--undermine the free
market and promote ``woke'' capitalism. And, if you can tell me what
that means, then I will look forward to your explanation.
So let's figure out what this is really about.
People invest their life savings for a safe, secure retirement, and a
lot of people want those investments in companies that reflect their
values, companies that protect the safety of their workers, that have
excellent ethics rules in place, guarding against conflicts of
interest; companies that are committed to protecting the environment
and managing the risks of climate change. In fact, companies with these
kinds of positive environmental, social, and governance policies are
often good financial investments as well. The two go hand in hand.
The foundation of a free market is that people can decide for
themselves where to invest their money, and they should have good,
trustworthy information in order to make those decisions so that the
market is fair and they don't get taken advantage of.
That is all this ESG rule that we are defending today does. It
asserts that investors should have the option, if they choose, to make
ESG investments. It is not a mandate. It does not elevate one type of
investment over another. All this rule does is allow workplace
retirement plans to offer ESG investments as an option to people who
want them, provided, of course, that those investments are prudent and
provide a safe and secure retirement.
So I can tell you that out in the real world of Minnesota, this is no
big deal. For decades, great Minnesota companies have been looking for
excellent returns on their investments. That is their job. But they
have also been trying to improve how their companies help their
community, help their employees, and help the environment. A lot of
people would say that is good business.
In fact, ESG investing has been growing in this country for decades.
People like it. They want to invest in companies that reflect their
values. More than $18 trillion are held in investment funds that follow
the ESG investment principle. So this isn't some sort of weird fly-by-
night new idea. ESG investing has been routine for years.
But what is new--what is new--is the way in which these extreme
Republican politicians whom we see today are trying to turn ESG into
their latest tool to rip us apart and to expand their own political
power, and that is so hypocritical.
You know, Republicans claim to be believers in a free market and
freedom of choice, but, today, with this vote, they are saying you
can't even think about basic concerns like protecting the environment
and fighting climate change or protecting workers or strong company
ethics. You can't even think about those things as you make investments
for your retirement. So instead of allowing people to make their own
choices about how to invest in their retirement savings, these
Republican politicians want to put their political values and the
interests of their donors in the middle of your investment decisions.
That is just wrong. It is out of touch, and I don't think it flies--
not in Minnesota and not in most places in this country.
So I hope we can reject this extreme agenda and vote no. This issue
is just too important. It is about letting people decide how to secure
their own retirement and allowing them to choose investment options
that match their values.
To be clear, there are good reasons that people would want to take
ESG factors into consideration. It is reasonable to ask whether your
retirement is invested in companies that operate sustainably and
practice good governance. It is reasonable to say that you don't want
to invest in a company with a record of discrimination or mistreating
workers.
You know, I have been in business, and I can tell you that these
values aren't just good for marketing or investor relations. They are
the markers of a healthy, sustainable business--businesses with the
capacity to confront risk, to innovate, to diversify, and to meet the
needs and challenges of an evolving world for long-term resilience and
viability. Businesses that consider these factors do better. It is good
business. They make more money.
So, colleagues, I ask for a ``no'' vote, which is a ``yes'' vote for
allowing people the freedom to invest their retirement in ways that
reflect their values and make money. I also ask my colleagues to join
me in my legislation, the Freedom to Invest in a Sustainable Future
Act, which would put into law this commonsense rule that we are voting
on today.
I commend the Department of Labor for their commonsense rule that we
have been talking about, which doesn't force choices. It creates
choices.
Let's defeat this resolution and allow people to choose how they want
to plan for the future for themselves.
I yield the floor.
The PRESIDING OFFICER. The senior Senator from Delaware.
Mr. CARPER. Before the Senator from Minnesota leaves the floor, I
want to say I could not agree with you more.
My dad used to talk to my sister and me about common sense. He would
say: Just use some common sense.
Thank you for appealing to our better judgment and common sense.
Thanks a lot.
Madam President, I rise today to talk for a few minutes about three
letters--ESG--and, as Aretha Franklin might say, to find out what it
means to me.
Now, as my staff knows, I am not a fan of acronyms or jargon. ESG is
a shorthand description for a form of investing that takes into account
environmental, social, and governance factors. It means very little to
the average American worker. So let me try to make this simple and real
for them.
Millions of American workers are saving for retirement or are already
withdrawing from a retirement plan, thanks to their employer-sponsored
retirement plan, like a 401(k). Each paycheck, hard-working Americans
do their best, even when times are tight, to put money away for their
future and the future of their children and grandchildren with the hope
that, down the road, those weekly or monthly contributions will grow
over time and help folks retire with dignity well into their golden
years. And with some good fortune and a prudent investment strategy,
retirement accounts can also provide certainty and security so that
Americans can enjoy their retirement--to take the vacation that you and
your spouse always wanted, to make a charitable donation, or maybe to
send their grandchild to college.
Those retirement savings often grow thanks to something called a
fiduciary, who manages American workers' retirement money. There is a
Federal law
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called the Employee Retirement Income Security Act, or ERISA, that
first passed in 1974 but has been amended many times to ensure that
fiduciaries are doing right by American workers.
When decisions are made on behalf of an individual investor, I don't
think it is controversial to say that every American wants their money
to grow as much as is reasonably possible. In order to make the best
decision for Americans' hard-earned retirement savings, I also don't
think it is controversial to say that the Federal Government shouldn't
be dictating investment decisions. It shouldn't.
While the previous administration actually blocked fiduciaries from
considering economic factors such as climate risk, I believe that is
the wrong approach. The Trump administration's unpredictable and uneven
rulemaking led to confusion in the business community and uncertainty
for investors.
Now, let's be clear. A range of economic factors, including climate
change, can impact investment returns and thus fiduciaries' investment
decisions. The reality is that concerns about our environment--that is
the ``E''--and about the social impact of corporate activities--that is
the ``S''--and the corporate governance structure of companies are all
highly relevant factors in assessing returns on investments in these
companies. That is the ``G.''
So I am pleased. I am pleased that the Biden administration has
embraced more of a free market approach, as my friend from New York,
the majority leader, outlined, I think, in today's Wall Street Journal.
Further, this rule reflects what successful marketplace investors
already know: There is an extensive body of evidence that ESG factors
could impact markets, could impact industries and companies.
I know that many of our colleagues are concerned about the ``E'' in
ESG. I am too. As chairman of the Senate Committee on Environment and
Public Works, I know we can't ignore the ``E'' in ESG. The economic
risks from climate change are real and they are significant, and
fiduciaries must be allowed--allowed--to consider whether those costs
may well lower their returns of an investment or not. Unfortunately,
our colleagues' efforts to nullify the current Department of Labor's
ESG rule threatens the principles-based process that has worked well
for nearly 50 years.
We should be making it easier--not harder, easier--for investors to
evaluate the sustainability commitment from our corporations who want
to do what is good for business and for our planet, this planet we call
home.
With that, I call on our colleagues to join me and many others in
opposing the CRA before us today.
I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mrs. MURRAY. Madam President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. MURRAY. Madam President, I will be honest. Based on the
arguments I have been hearing, I am not sure everyone who is opposing
the Biden administration's ESG rule has actually read the policy. Some
of the arguments for the resolution overturning this rule simply don't
add up. In fact, they are a contradiction. ESG investing is simply the
practice of taking into account the environmental, social, and
governance practices of companies that you invest in.
For instance, just as a hypothetical, if you are against investing in
so-called ``woke'' causes, you are actually laying out your own ESG
criteria. Here is the thing: The Biden administration rule would allow
that. They would allow that because--and this is an important point, I
think, folks are missing--the Biden rule is fundamentally neutral on
how ESG factors are taken into consideration, so long as the investment
fund is meeting its fiduciary obligations to its beneficiaries.
I am not sure anyone gets that because the fact of the matter is that
some of the same people who are railing against this rule and against
ESG investing have advocated for positions that essentially are ESG
investing.
When Republicans push for legislation to protect local and State
governments that divest from companies based on their policies toward
Israel, that is a form of ESG investing. It is also worth noting, if
you manage a retirement plan for a faith-based organization and you
want to make sure you are investing in accordance with your client's
faith, that, too, would be ESG investing. When we call for divesting
from foreign adversaries due to human rights and national security
concerns, again, we are actually talking about ESG investing.
If anyone wants to argue that that is different, that it is a matter
of national security, I will note there is no question that climate
change is also a really serious national security issue, but that is,
honesty, beside the point here.
Let me say it again: The rule we are talking about is neutral--
neutral--on whether a fiduciary is considering these factors from a
particular perspective. This rule is not about saying the left's or the
right's taking on a given environmental, social, or governance issue is
correct. It is about acknowledging that these factors are reasonable
for asset managers to consider. It is about risk mitigation to
safeguard retirement plan savers' nest eggs. It is about letting asset
managers do their jobs without the government getting in the way. That
shouldn't be controversial. It, actually, should be common sense.
I mean, think about it. When it comes to environmental factors,
shouldn't financial advisers have the freedom to consider environmental
practices when climate disasters cost trillions of dollars a year?
Shouldn't they have the freedom to take into account whether a
company is adopting sustainable practices that reduce its costs and
consumption or if it is moving to clean energy so that it makes it less
reliant on foreign oil?
When it comes to social factors, we live in a diverse nation. That is
part of what makes our country so vibrant and so strong. Shouldn't
financial advisers have the freedom to consider whether companies are
doing the most to tap into that strength?
Shouldn't they have the freedom to account for whether companies are
well situated to serve and speak to the broadest range of people or to
grow by reaching communities that are currently underrepresented in
their customer base?
When it comes to how companies are governed, we are facing workforce
shortages today. Companies are having huge challenges in finding and
retaining workers. So shouldn't financial advisers have the freedom to
consider how well companies are paying their workers or how seriously
they take safety and issues like workplace harassment or what sort of
benefits they might provide to retain workers, like childcare, paid
leave, or more?
These are concrete factors that have huge implications for companies'
bottom lines. So why wouldn't we give advisers the freedom to consider
them?
Why do Republicans want to tie their hands and meddle in the free
market by reversing this balanced, neutral rule?
Despite the misunderstandings and misrepresentations and despite how
badly some of my colleagues seem to be missing the point, at the end of
the day, this is actually pretty simple. Financial security is about
planning for the future, and you can't plan for the future if you
aren't allowed to consider the environmental or social or governance
factors that are shaping it.
So I urge my colleagues, today, to join me in voting against this
resolution.
I yield the floor.
The PRESIDING OFFICER. The junior Senator from Rhode Island.
Mr. WHITEHOUSE. Madam President, I was delayed in joining my
colleagues here to talk about this so-called anti-woke capitalism, or
anti-ESG scheme, that has been propagated.
I think the important thing to begin with is to understand what is
happening out there, why this has happened. The Republicans would like
us to believe that some bizarre, viral epidemic of wokeism has spread
into America's great financial companies, into the investment advisers,
into the banks, into all kinds of fiduciaries, and that that needs to
be somehow excised. That is not what has happened. That is
preposterous, magical thinking.
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What has happened is that the long forecasted dangers of climate
change that scientists have been telling us about for years have now
gotten so real and are so immediate that they have hit the due
diligence horizon for big banks, big investment companies, corporate
boards, and other fiduciaries. When you owe somebody else a fiduciary
duty, like your shareholders or your investors or your customers at a
bank, then you have to tell them the truth, and you have to tell them
the truth about risks. The risks associated with climate change--the
risks caused by the fossil fuel industry's relentless emissions--are
now so real and so immediate that they can't be denied by big
institutions that have no real interest in climate change but are
absolutely obliged to tell the truth as fiduciaries.
So that fiduciary threshold--that due diligence horizon--has been
crossed, and the fossil fuel industry, which is used to bullying to get
its way, is now pushing this completely fake, anti-ESG effort in order
to try to undo what the free market and what real life in facts and
fiduciary obligations are causing other industries to deal with.
The one telltale clue here is that, when they are done talking about
woke capitalism and when they are done talking about anti-ESG stuff,
when you actually look at what the objection is--what the specific
thing is that they are pushing back against--in the ESG, it is always
the ``E.'' It is never the ``S.'' It is never the ``G.'' It is not
social stuff. It is not governance stuff. It is environmental stuff.
Within that ``E,'' for environmental stuff, it is ``E'' for emissions.
That is always the gravamen of the complaint.
So that tells you a lot about who is behind this, and who is pitching
it tells you a lot about who is behind this because you have got fossil
fuel-funded organizations, like the Republican Attorneys General
Association that is cranking up and turning out Republican attorneys
general to push this theory. You have got the Republican State
treasurers, often funded by the fossil fuel industry, and a group
called the State Financial Officers Foundation, which has glommed the
State treasurers together to try to push on this. You have got State
boards, like the Texas Railroad Commission--again, heavily, heavily,
heavily involved with the fossil fuel industry--that are pushing all of
this.
When you look at what it is, you can see that its target is always
fossil fuel emissions, and you can see that its proponents are always
fossil fuel funded. That tells you why we are where we are.
The rule that the fossil fuel industry pushed through during the
Trump administration--an administration which did essentially
everything the fossil fuel industry wanted it to do--would have
restricted the ability of investment professionals to deliver the
products that customers actually wanted and prevented them from looking
at environmental risks, social issues, or governance. Again, this is
really about the environmental piece. The Biden rule just undoes that.
Nobody has to do ESG stuff, as that is dictated by customer demand,
but if you want to and if your customers are demanding that and if you
want to protect them from climate risk, well, there you go. You have to
do it.
Another clue about the mischief here is who some of the propagators
of this theory have been. One is the Heritage Foundation. The Heritage
Foundation is a notorious climate denial group. It has received
millions of dollars from the Koch brothers' political enterprise, from
Koch foundations, and has plenty of fossil fuel ties. There is the
Texas Public Policy Foundation, which is another group that is a front
group for the oil and gas industry. I have already mentioned RAGA,
which is heavily fossil fuel funded. It helped produce Scott Pruitt,
whom you may remember from EPA disgrace. They had such control over
RAGA that they were able to get him, as the attorney general, to write
a letter with the identical text from a fossil fuel company, send it in
to the EPA under his own letterhead, under his own signature as
attorney general, even though the entire text was written by a fossil
fuel company.
So that is the kind of relationship it has with RAGA, which, by the
way, also helped turn people out for the January 6 insurrection. It is
a really, really high-quality operation there.
The last group that I will mention is the Marble Freedom Trust. The
Marble Freedom Trust is the 501(c)(4) pop-up operation that magically
appeared in Utah to be the recipient of a $1.6 billion slush fund,
gifted to it by a far-right billionaire. That put it into the hands of
a guy named Leonard Leo, whom I have talked about here on the floor
before, who is the orchestrator of the scheme to capture the Supreme
Court and put it into special interests' hands. His reward for his
success in that project was this $1.6 billion slush fund that he now
controls, and he controls it through that Utah 501(c)(4) pop-up called
the Marble Freedom Trust.
The guy who delivered that money into the Marble Freedom Trust was
also famous for his support for the Heartland Institute, which is
really just an epic climate denial crowd, to the point where one of
their more notorious acts was to put up a billboard equating climate
scientists to the Unabomber. That is the quality of the debate about
climate change that the Heartland Institute brought, and the
billionaire who has teed up the Marble Freedom Trust was a prime backer
of all of that and, indeed, had his CFO go on the board of the
Heartland Institute to try to keep the thing afloat so that it could be
moderately well managed and continue to do its great work of billboards
that compared the climate scientists to the Unabomber.
So that is where we are. These guys are deep into this anti-ESG push.
The dark money operation that I talk about on the floor all the time is
behind this ESG thing just the way it is behind the capture of the
Court and just the way it is behind the whole climate denial operation
that has stymied progress on climate in this building.
A few billion dollars here and there in politics turns out to deliver
a lot, and the fossil fuel industry desperately wants to stop people
who have fiduciary obligations from telling the truth about climate
risks to their clients--to the people whom they have that fiduciary
risk to--and this is the pitch to do that so that there is a legal hook
to stop people from meeting their fiduciary obligations by disclosing
real-life, actual climate risk now that it is so clear and so immediate
that it is now obliged to be disclosed for due diligence.
Let us vote no on H.J. Res. 30, and let's do more than that. Let's
call this out as a phony op. This is a scheme, run by the fossil fuel
industry, to try to solve the problem it has--that its emissions
problems are now so real that fiduciaries have to address it. That is
the problem. A fake operation funded by billions of dollars of dark
money through all of these slimy corporations and entities that doesn't
disclose who their real donors are and through all of these political
operatives that get their funding from the fossil fuel industry--that
is not something we want to encourage in this country. We have had
enough of the public not being listened to. In this case, actual
customers, actual clients, are not being listened to because of this
pressure.
Let's call this out. Let's put an end to it. This is not healthy.
There is something rotten in Denmark.
With that, I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. WARNER. Madam President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. WARNER. Madam President, I rise today in joining my other
colleagues, organized by my friend the Senator from Hawaii, to ask my
colleagues to vote against the resolution, which I think we will be
taking up literally in the next 10 minutes, which would strip away a
commonsense Department of Labor rule that simply provides fiduciaries--
remember who we are talking about: fiduciaries, people who are
responsible, under ERISA plans, to think about their beneficiaries over
the long term. We are trying to make sure that those fiduciaries who
are charged with maintaining retirement plans have the ability to
adequately account for environmental, social, and governance factors.
I know some of my colleagues have come on the floor and said this is
an
[[Page S555]]
attempt by the Department of Labor to somehow mandate the retirement
investments of hard-working Americans. Nothing could be further from
the truth. The truth is, we look at profit and loss, we look at cash
reserves, and we look at financial accounting. But the idea that
environmental, social, and governance factors can't even be looked at
is an interference in the business cycle that really kind of goes
beyond the pale.
I am often regarded--I have to acknowledge this--in my caucus as
sometimes being a Member who has the most experience with capitalism,
the most experience with business. I absolutely believe in our system.
There is nothing better. But the idea that today--and I don't want to
copy some of the comments that have been made, but the idea that today,
a lot of folks who have never been able to read a balance sheet are
going to come in and tell paid fiduciaries what they can consider or
what they can't consider in terms of the long-term economic returns for
their beneficiaries--I wonder if things have gotten a little topsy-
turvy here.
I can imagine if some people were saying ``Well, we need to make sure
we have this rule in place'' or ``Overrule this rule'' or ``Put this
binding in place'' if you are talking about day traders or if you are
talking about a hedge fund that only looks at the next quarter's
results--the kind of short-term capitalism that too often, I think, is
eating at the core of our great system. But if we are going to look at
long-term returns, we ought to take and have to take into consideration
factors--in many cases, factors that may not have been as relevant 30,
50, 70 years ago. Some are going to say we can't look at those.
Unfortunately, my colleagues across the aisle have decided to take
away a useful term, a useful set of analyses, something that has been
asked for by these pension funds, by these beneficiaries, and instead
try to turn it into a political issue.
Let me recall back 75 years ago. If you look at the Fortune 500 and
the companies that were involved in that Fortune 500, about roughly 75
to 80 percent of those companies' assets were tangible assets. What
does that mean? It means it was their plant. It was their equipment. It
was their machinery.
Fast-forward--and a lot of this is due to great innovation in the
technology field--and those same Fortune 500 companies are dramatically
different than the companies named 60, 70 years ago. If you look at
their balance sheets today, 75, 80 percent of their assets are
intangible assets. What are intangible assets? Intangible assets are
things like intellectual property, and that is coming about from a
healthy workforce. But more than anything else, it is the men and women
who work at these firms. Virtually every CEO I have heard from in the
last 10 years has said: My biggest asset is my workforce.
The idea that somehow--because ESG is not just E; it is also S, and
that falls into workforce--the idea that somehow a pension fund can't
look at workforce retention, workforce quality, workforce
characteristics as a measure of what they want to invest in, to me, is
a little whacky.
Let me actually call on a reference sort person, whom I hope my
colleagues on the other side of the aisle will acknowledge, and that
was President Trump's Chairman of the SEC, the Securities and Exchange
Commission, Jay Clayton, whom I had a very good working relationship
with. He said that human capital disclosures can and should inform
investment decisions.
Chair Clayton said:
Our current disclosure requirements date back to a time
when companies relied significantly on plant, property, and
equipment to drive value. Today, human capital represents an
essential driver of performance for many companies albeit in
different ways.
So under Mr. Trump's SEC, there was a rulemaking process that started
to make sure that human capital components can be an appropriate focus
of reviews, particularly for companies and entities that want to invest
for the long term.
I am concerned that this approach we are taking today might
indirectly preclude those fiduciaries who represent pension funds,
long-term investors--they are no longer going to be able to actually
look at this critical criteria around human capital.
The other thing is, the Department of Labor rule--and I know a lot of
my colleagues have spoken to this and talk about: Well, what about the
environment? I think we all would recognize or most of us would
recognize the fact that climate change is real and poses a rapidly
growing threat to the long-term feasibility of investments made on
behalf of hard-working Americans.
While this Department of Labor rule won't direct our Armed Forces, I
think it is really important to understand that the FFRDCs, the
federally funded research and development corporations--the RANDs, the
MITREs, the CNA, which does naval work analysis, federally funded--if
we are going to apply these same kinds of Department of Labor
prohibitions on our Armed Forces, we couldn't allow the CNA to look at
the long-term effects on the Navy--and I don't want to give away a
secret here, but they have been looking at this issue for over 20
years--that they couldn't make those kinds of predictions about what
effect sea level rise would have on our Navy.
I tell you, we are blessed in the Commonwealth of Virginia to have
the world's largest Navy base, in Norfolk, and I can assure you,
virtually every year or every other year, we have to raise the piers,
literally spend hundreds of millions of dollars to raise the piers to
make sure that Navy base can still be utilized.
So if it is a smart enough, good enough requirement that the Navy and
our Armed Forces are looking at the E of ESG, why would we preclude the
private sector from doing that?
I think the Department of Labor's rule on ESG is both practical and
necessary. I think those funds that chose not to abide by it, that is
their right. That is what capitalism is all about--making choices. But
the notion that we are going to somehow come in and impose requirements
on the market and take away long-term investors' ability to consider
human capital, to consider the effects of climate change, and I have
not even touched--I know we are going to have to go to a vote--on
issues around corporate governance, all which can lead to, longer term,
better returns. If this was a rule about day traders and quarter-to-
quarter hedge fund folks, I might get it. But in terms of protecting
the long-term value creation in long-term sustainable capitalism, I
think this effort today sadly misses the mark and will do a great deal
of damage.
I urge my colleagues, when the vote comes, to vote against the CRA.
I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. SCHUMER. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Murphy). Without objection, it is so
ordered.
H.J. Res. 30
Mr. SCHUMER. Mr. President, I have to admit I come to the floor sort
of confounded. For a long time, my Republican friends prided
themselves--prided themselves--for being the party of free markets, the
party of small government, the party opposed to injecting political
ideology into the decisions of private investors and managers and
companies. But apparently all that was talk because, today, our
Republican friends are making an effort to limit free market choice and
inject hard-right ideology into private sector decision making.
Republicans are attempting to force corporations and managers, against
their will, to turn back the clock 50 years, even if it means getting a
lower return on investment--even if it means getting a lower return on
investment.
Now, the facts here are not difficult. The Department of Labor
recently introduced a rule recognizing that retirement fiduciaries may
consider ESG factors when making investment decisions. The Republican
proposal, meanwhile, wants to undo that rule, and, across the country,
Republican State legislators are trying to punish managers who dare
consider, on their own volition, ESG.
Note, Mr. President, that I said ``may''--not ``must''--when
describing the rule because the rule that the DOL has put in effect is
completely optional. Let me repeat that. The DOL
[[Page S556]]
rule is completely optional while the Republican measure is a mandate.
In fact, the current rule goes out of its way to make sure that
decision making remains solely in the hands of the fiduciary. Nothing
changes the fact that investment decisions must be shown to be prudent
above all else.
Now, the hard right has made a lot of noise trying to make ESG their
dirty little acronym. They say this is about wokeness, that this is a
cult, that it is some grave intrusion into finance. It is the same
predictable, uncreative, unproductive attacks they use for anything
they don't like.
But this isn't about ideological preference. ESG is about looking at
the biggest picture possible so the investors can make decisions that
decrease risk while increasing returns. In fact, more than 90 percent
of S&P companies already publish ESG reports today. So none of this is
new. It has been a long-established practice, one that Republicans
suddenly say they don't like and want to forbid.
But why shouldn't managers evaluate the risks posed by an
increasingly volatile climate if they deem it helps them get a return
on their investment? Why shouldn't they consider the consequences of an
aging population or other trends that could impact their portfolio? And
even a better question is this: Why are Republicans going out of their
way to prohibit investors from making the best possible choices as they
manage their funds? Why are Republicans trying to forbid investors from
considering climate and other factors if they believe it would help
them get a better return?
The bottom line is this: The present rule gives investment managers
an option. The Republican rule, on the other hand, ties investors'
hands. Republicans talk about their love of the free market, small
government, letting the private sector do its work, but their obsession
with eliminating ESG would do the opposite, forcing their own views
down the throats of every company and investor. The Republican
amendment, again, would force their own views down the throats of every
company and investor.
You know what we say on this side? Let the market work. If that
naturally leads to consideration of ESG factors, then Republicans
should practice what they have long preached and get out of the way.
I thank my Democratic colleagues who are joining us in opposition to
this measure.
I yield the floor and call the question.
The PRESIDING OFFICER. The clerk will read the title of the joint
resolution for a third time.
The joint resolution was ordered to a third reading and was read the
third time.
Vote on H.J. Res. 30
The PRESIDING OFFICER. The joint resolution having been read the
third time, the question is, Shall the joint resolution pass?
Mr. BRAUN. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The clerk will call the roll.
The bill clerk called the roll.
Mr. DURBIN. I announce that the Senator from California (Mrs.
Feinstein), the Senator from Pennsylvania (Mr. Fetterman), and the
Senator from Oregon, (Mr. Merkley) are necessarily absent.
Mr. THUNE. The following Senator is necessarily absent: the Senator
from Idaho (Mr. Crapo).
The result was announced--yeas 50, nays 46, as follows:
[Rollcall Vote No. 35 Leg.]
YEAS--50
Barrasso
Blackburn
Boozman
Braun
Britt
Budd
Capito
Cassidy
Collins
Cornyn
Cotton
Cramer
Cruz
Daines
Ernst
Fischer
Graham
Grassley
Hagerty
Hawley
Hoeven
Hyde-Smith
Johnson
Kennedy
Lankford
Lee
Lummis
Manchin
Marshall
McConnell
Moran
Mullin
Murkowski
Paul
Ricketts
Risch
Romney
Rounds
Rubio
Schmitt
Scott (FL)
Scott (SC)
Sullivan
Tester
Thune
Tillis
Tuberville
Vance
Wicker
Young
NAYS--46
Baldwin
Bennet
Blumenthal
Booker
Brown
Cantwell
Cardin
Carper
Casey
Coons
Cortez Masto
Duckworth
Durbin
Gillibrand
Hassan
Heinrich
Hickenlooper
Hirono
Kaine
Kelly
King
Klobuchar
Lujan
Markey
Menendez
Murphy
Murray
Ossoff
Padilla
Peters
Reed
Rosen
Sanders
Schatz
Schumer
Shaheen
Sinema
Smith
Stabenow
Van Hollen
Warner
Warnock
Warren
Welch
Whitehouse
Wyden
NOT VOTING--4
Crapo
Feinstein
Fetterman
Merkley
The joint resolution (H.J. Res. 30) was passed.
____________________