Washington, D.C. – A comfortable, secure retirement is the dream of every American. Most of us plan for it by investing part of our income throughout our working lives into funds we believe are being managed by people whose primary concern is maximizing our returns.
Unfortunately, too many of us don’t pay enough attention to what our fund managers are doing. Right now, as a new report from the Committee to Unleash Prosperity has uncovered, many of the large investment houses that manage our retirement portfolios are using their power to push for political and societal changes. The shorthand for these efforts is “ESG” although some, now that the original name has so many negatives associated with it, have proposed redubbing it “patriotic capitalism.”
Before Joe Biden became president, money managers were supposed to prioritize their fiduciary responsibility to their investors over everything else. Now that the Biden Administration – over the objection of Congress – has weakened those rules, fund management firms have been freed up to factor in environmental, social, and governance concerns in a way that’s equal to their responsibility to make the most money possible for their investors and shareholders.
These financial powerhouses own 75% of the United States’ publicly traded companies. Many of them cast votes in favor of special-interest shareholder resolutions imposing racial and gender equity mandates on corporate senior management, ordering companies to divest from or refuse to underwrite money-making energy exploration and infrastructure projects, and directing investments that line up with current progressive political trends rather than maximizing ROI.
By whatever name it is known – ESG or patriotic capitalism or social investing – which is what it was called before it was ESG – it’s a raw deal for the small investors whose life savings are managed by these gigantic funds.
The results of our report may surprise you. We condensed the proxy voting history over the last year on 50 major ESG shareholder resolutions and graded each firm on its performance. The scorecard shows which firms are doing well by their investors and which ones are performing poorly. Remember, these firms are some of the world’s biggest money management firms. You may rely on them to safeguard and grow the money you’re counting on to live out your golden years in comfort.
We’re not against ESG investing if people choose to do it. Our research shows however that many small investors have no idea how the proxy voting rights attached to the shares these firms buy with their money are being voted. These companies are pushing ESG without their investors’ knowledge or consent. Since that may lead to lower returns, which the Committee study shows is often the case, we suggest you make yourself aware of what’s being done with the power that comes from managing your money.
We’re not telling you how to invest or with whom. That’s your decision. Any actions you take are best done with the help of a competent financial advisor who understands all the nuances involved. What we are suggesting is that you be careful with your investments and make sure any firm with which you do business puts its fiduciary responsibility to you and your family ahead of any ESG goals.
Go through the scorecard. Match it against your holdings. How are the companies that manage your money doing with it? Thank them if the returns are good. If you’re losing money because of ESG, let them know you expect them to do better for you. The security of your retirement may depend on what you do.