Democratic Sen. Joe Manchin of West Virginia cited Germany’s struggles to avoid blackouts Thursday to defend his vote to scrap a proposed rule that would allow Environmental, Social and Governance (ESG) criteria to be used for retirement funds.
ESG, also known as “sustainable investing,” according to the Corporate Finance Institute, can factor in corporate policies on gun control, environmental issues, abortion or other issues in addition to or instead of strictly looking at a corporation’s profitability. (RELATED: ‘Could Kill Our Economy’: Dem Senator Sounds The Alarm On Biden Admin Climate Rules)
“Don’t you think the geopolitical risk you’re taking when you make these decisions to make sure these programs stay solvent, should be considered too?” Manchin told Fox Business host Neil Cavuto. “If you don’t, basically, if you’re not sure, look at what happened at the EU. Ask Germany how well it worked for them.”
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Germany, which faced an energy crisis that put the country at risk of economic collapse after Russia invaded Ukraine on Feb. 24, 2022, announced a $220 billion plan to shift all of its energy production to renewable sources. Germany’s decision to phase out other forms of fuel, like coal, led to Germans stocking up on candles to save electricity, while the country reportedly needs the equivalent of 43 soccer fields of solar panels every day along with over 30 wind farms a week, according to Bloomberg News.
Manchin and Democratic Sen. Jon Tester of Montana voted with 48 Republicans to overturn regulations from the Securities and Exchange Commission (SEC) that would allow the use of ESG by retirement fund managers. The House of Representatives voted to scrap the rule Tuesday, but the bill faces a veto threat from President Joe Biden.
Critics of ESG pointed to crises in Sri Lanka, which banned chemical fertilizers that resulted in a 50% drop in crop yields in 2021, and Ghana, which suffered blackouts.
Missouri announced it was pulling all assets from BlackRock Oct. 18, claiming the company’s push for ESG was a “massive fiduciary breach,” while Florida removed $2 billion from the company in December. Four other states announced they were pulling their assets, the Financial Times reported in October.
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