Cassidy Offers Support for Trump ESG Rule

Senator Bill Cassidy, R-Louisiana, who chairs the influential Senate Committee on Health, Education, Labor, and Pensions, this week published a letter to Secretary of Labor Lori Chavez-DeRemer signaling his support for the Department of Labor’s decision to replace a rule about evaluating retirement plan investments using environmental, social and governance-based considerations.  

In the letter, Cassidy wrote that retirement plan fiduciaries need only to act with a worker’s best interests in mind. As it relates to ESG factors, “some fiduciaries have failed to uphold this duty and misused workers’ savings in order to invest in activist causes,” Cassidy wrote. “Under the guise of ESG considerations, fiduciaries choose investments or exercise shareholder rights based on subjective, unprovable factors to further an ideological agenda.” 

Each of the last four administrations has modified the rule, with Democrats favoring investment policies that allow ESG factors to be considered, while Republicans requiring that only financial considerations be factored into decisions. 

The administration of President Donald Trump has cracked down on initiatives that consider diversity, equity and inclusion since he reassumed office in January.  

Still, independent groups have argued that ESG factors are pecuniary—financial—as required by the first Trump administration’s ESG rule. For instance, the Interfaith Center on Corporate Responsibility has been working on making legislators aware of the financial benefits of ESG considerations.  

Proponents of ESG factors point to research like the 2020 McKinsey & Co. study that analyzed more than 1,000 global firms and found that companies with the most diverse executive teams were 36% more likely to outperform peers on profitability metrics. 

“The Trump administration and MAGA Republican opposition has largely centered on characterizing DEI and ESG initiatives as ‘social engineering’ and ‘non-pecuniary factors,’” says Eric Darrisaw, an ICCR board member working on the issue. “Regardless of any forthcoming policy changes, DEI merits rigorous academic and practical examination.”