Biden to allow employers to consider green investments in 401ks

Biden OVERTURNS Trump rule and tells 401,000 investors to prioritize green investments over profits, despite plans already losing an average of $34,000 this year

  • Employers will now be able to invest their pension money in green industries
  • ESG investments consider the environmental and social impacts of investments
  • The change undoes a rule imposed under Trump that required profit to be prioritized
  • The new rule, introduced by Biden, will take effect in 60 days

The Biden administration will allow employers to invest retirement money in green industries that could provide lower returns for Americans.

The move, announced Tuesday, reverses a rule Trump imposed in 2020 that forced employers to prioritize profit when making 401(k) investments.

The new rule introduced by the US Department of Labor will allow retirement plan investors to focus on ESG investing, which considers the environmental and social impacts of investing.

The change comes as the average 401(k) in the United States is down about 25% this year, or about $34,000, according to data from Fidelity.

Republicans have argued against the growing popularity of ESG investing: many argue that the concept goes against the primary purpose of investing, which is to maximize returns.

Proponents of the change suggest that companies can be more profitable than their competitors when they treat their workers fairly and think about environmental impact.

Biden Administration to Relax Rules to Allow Employers to Invest Retirement Money in Green Industries That Could Provide Lower Returns for Americans

Biden Administration to Relax Rules to Allow Employers to Invest Retirement Money in Green Industries That Could Provide Lower Returns for Americans

Change reverses a rule Trump imposed in 2020 that restricted employers to investment strategies that prioritized financial interests

Change reverses a rule Trump imposed in 2020 that restricted employers to investment strategies that prioritized financial interests

This easing of rules was first proposed by President Biden after he ordered government agencies last year to assess climate-related risk for retirement and retirement investments.

The change will go into effect in 60 days, the Labor Department said on Tuesday.

The Trump administration issued regulations in 2020 that had a “chilling effect” on the uptake of workplace retirement plans, even though the ESG fund would offer a financial boon, he said.

USDOL's Lisa Gomez said climate change would be a worthwhile consideration for investors

USDOL’s Lisa Gomez said climate change would be a worthwhile consideration for investors

“Climate change and other environmental, social and governance factors may be helpful to plan investors as they make decisions about how to best grow and protect the retirement savings of working Americans,” said Lisa Gomez, assistant secretary for benefits security. for employees.

According to an online survey conducted by Sphere, a climate-friendly 401(k) fund, about 73 percent of more than 200 respondents said they think savings growth is an “extremely important” consideration when it comes to retirements.

By comparison, only 17% said investing for a better climate future was hugely important, and nearly 9% said it wasn’t important at all.

The shift is good news for those caught up in the ESG investment drive, which includes major financial institutions and especially BlackRock, which is responsible for the retirement plan assets of an estimated 35 million Americans.

BlackRock and other major asset managers have incorporated ESG investing into a public display of their commitment to sustainability that GOP finance officials say eschews US energy but welcomes China-linked firms with open arms.

It is the largest asset manager in the world, managing approximately $10 trillion.

BlackRock CEO Finke says making investments to prepare for a net-zero economy is the best investment decision

BlackRock CEO Finke says making investments to prepare for a net-zero economy is the best investment decision

BlackRock CEO Larry Finke says making investments to prepare for a net-zero economy is the best investment decision.

“We focus on sustainability not because we are environmentalists, but because we are capitalists and trustees of our customers,” he wrote in his annual letter to shareholders.

Florida Governor Ron DeSantis labeled ESG investing a “capital awakening” earlier this year. In June, DeSantis proposed legislative changes to prevent managers of state funds from considering ESG factors when investing state money.

“We are protecting Floridians from awakened capital and asserting the authority of our constitutional system over the ideological power of corporations,” DeSantis said in June.

announcement

.

Leave a Comment

%d bloggers like this: