He added, "We have a responsibility to put the needs of seniors ahead of climate extremists and far-left activists who want to use retirement savings to finance a political agenda."
Most of the witnesses Republicans called to testify at the hearing felt similarly to Smith, including Utah State Treasurer Marlo Oaks, who referred to ESG as a dangerous investment scheme.
"ESG has created an uncontrollable impulse to pressure corporations to solve complex global and societal issues," Oaks said. "These issues, such as climate, income inequality, guns and abortion to name just a few, should be in the purview of a democratically elected government. ESG hijacks corporate governance to advance ideological objectives often divorced from and often detrimental to long-term shareholder value."
Republicans took aim at the Department of Labor's new rule that permits ERISA retirement plan fiduciaries to consider ESG factors when selecting investments.
Commonly referred to as the "ESG rule," the Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights rule, took effect Jan. 30.
Department officials and retirement experts contend that the rule is neutral and maintains the department's position that fiduciaries may not sacrifice investment returns or assume greater investment risks as a means of promoting collateral social policy goals.
A group of 26 Republican attorneys general filed a lawsuit challenging the rule, but in September, a Trump-appointed judge sided with the department and said the rule did not violate ERISA nor was it arbitrary and capricious. The Republican attorneys general on Oct. 26 filed a notice of appeal to have the case heard before the Fifth Circuit Court of Appeals in New Orleans.
During his opening statement Nov. 7, Rep. Richard Neal, D-Mass., took issue with Republicans holding the hearing at all.
"Could you imagine after a lifetime of hard work being told by House Republicans how you can and cannot invest your savings?" he said. "The public isn't interested in being told what to do by the government. Politicizing retirement policy jeopardizes workers' hard-earned savings, and that's the last thing the American people need."
Neal and other Democrats said most of their constituents don't know what ESG investing is but are concerned about retirement. Neal said Congress should work to preserve Social Security and build on the bipartisan successes of SECURE 2.0, a comprehensive retirement security package passed in December, to help more people save for retirement.
Another witness, Brandon Rees, deputy director of corporations and capital markets for the AFL-CIO, also criticized the hearing topic and said the consideration of ESG factors by retirement plans is already well regulated by the Department of Labor.
"We urge Congress to focus on genuine retirement income security crises that we face in our nation rather than ESG-related 'woke' hysteria," he said. "Laws and regulations that restrict the ability of retirement plan trustees and asset managers to consider ESG risks contradict their fiduciary duties. Fiduciaries, not politicians, should make these judgments."
