Conservative Coalition Urges Lawmakers to Safeguard Investment Freedom

Americans have heard the term “ESG” used by politicians of all political philosophies in the last year or two. They have been told they must love it or hate it. First, most might not even know what it means or how it impacts them. ESG – rather unintuitively – stands for “Environmental, Social, and Corporate Governance.” It is a set of considerations proposed for making investment decisions. Sadly, both sides of the political spectrum are attempting to politicize the investment decisions of American businesses.

Politicians on the left want to mandate that private companies work ESG considerations into their business decisions. They are even attempting to expand the authority of the Securities and Exchange Commission (SEC) to require companies report on how well they are doing with ESG compliance. These reports would cost the economy billions of dollars. Other estimates show that trillions in dollars in stock price increases could be lost going forward if such a proposal were implemented.

On the right side of the aisle, conservative lawmakers want to ban companies from considering ESG altogether. This is almost certainly because of ESG’s leftward tilt. However, this ban infringes on the rights of these companies and their shareholders to invest their money in whatever manner they see fit. Americans are free under the First Amendment to invest in causes in which they believe. As long as existing laws are followed, there is no reason to interfere.

In response to this double-sided attack on investment freedom, the Taxpayers Protection Alliance joined a coalition of groups to stop the politicization of investments. In a letter sent to the leadership of the House Financial Services Committee, the coalition urged lawmakers to abide by a set of principles that will safeguard the rights of American investors.

The letter outlined seven key principles on the issue:

1. Reject the creep of Big Government interventions; Promote limited-government and pro-growth policies that eliminate red tape and reduce tax burdens.
2. Protect pensions and investments from politicization. Do not ban nor mandate certain types of investment decisions that are outside the realm of maximizing return on investments by individuals or entities in the free market.
3. Ensure fiduciaries uphold the Duty of Care and Loyalty at all times and act in the interests of their clients.
4. Remove the shackles of government and allow businesses, pension funds, and individuals to responsibly plan for future uncertainties in a time of rising prices and increased debt.
5. Encourage business-friendly environments with free and informed capital. Do not interfere with the free flow of capital.
6. Allow businesses to voluntarily adopt sustainable practices or address the social considerations of their workforce free from government mandates.
7. Keep the government out of boardrooms and reject politically motivated efforts to steer government business away from or towards certain companies based on narrow political agendas.

Policymakers should abide by these principles, allowing private entities to invest their assets how they see fit, in accordance with existing laws. There are enough issues facing state and local governments without expanding their authority into this area.