The other day, I was doing the “housewife” thing–which included cleaning bathroom toilets–and because I am a nerd of the first order, the sight of soapy water swirling down the drain made me think of the GOP.
When “Republican” was the name of a political party that had a policy agenda, a major part of that agenda was protection of the free market and a pretty sustained pushback over government ‘s business regulations. (Barry Goldwater famously proclaimed that government didn’t belong in either your boardroom or your bedroom…but of course, Barry is now considered a RINO.)
Most GOP lawmakers acknowledged the need for government regulations that were necessary to provide an economic “level playing field”–the sorts of regulations meant to prevent unfair business practices, corruption and collusion, and/or harm to the public. The policy arguments focused on the extent and necessity of those rules– matters about which people could have good-faith disagreements.
Those were the good old days!
Axios recently reported on the GOP’s eagerness to tell private businesses what they can and cannot do, and their preferred rules have absolutely nothing to do with bad behavior by their targets. Quite the contrary.
Republicans in Congress have teed up the first veto of the Biden presidency. Curiously, the vetoed bill has nothing to do with children’s books, unisex bathrooms, or even fiscal policy. Instead, it focuses on stock-market asset allocation.
Why it matters: The environmentally conscious global consensus of institutional investors is highly unlikely to be derailed by U.S. political point-scoring. But no good can come from the way in which investment officers increasingly need to navigate a political gantlet.
Driving the news: Both the House and the Senate this week passed legislation overturning a Labor Department rule designed to ensure that fund managers remain capable of considering environmental, social, and governance (ESG) factors when making investments.
The aim of the bill was not to change the law — a veto was always certain — but rather to create a 2024 campaign issue. Politicians like Sen. John Barrasso, a Republican from Wyoming, characterize the Department of Labor rule as creating “regulations to invest retirement money in far-left liberal causes.” That’s false — the rule mandates nothing at all — but Republicans are hoping it might prove an effective attack vector all the same.
The article quotes an NYU law professor–an expert on environmental law– opining that the bill “has to be the ne plus ultra of hysterical overreaction to any policy with the word climate in it.”
As the Axios report notes, the GOP is politicizing a “decidedly anodyne” Department of Labor rule that is, in fact, a “laissez-faire attempt to reiterate that investors are free to follow any investment thesis they like.” In other words, a rule aiming to strengthen what used to be Republican orthodoxy.
Climate change is probably the biggest risk facing global markets over the long term. Investors therefore have a clear financial incentive to invest in the companies that are best placed to mitigate or adapt to climate risk, as a way of maximizing their own long-term returns.
There is always a fiduciary reason for ESG investments, but a Trump-era rule tried to discourage such strategies anyway. Even the U.S. Chamber of Commerce and the American Petroleum Institute were unenthusiastic about the Trump administration’s stance.
The Department of Labor rule the current bill tries to overturn was written to make it clear that investors don’t need to fear the potential ire of regulatory agencies when they adopt ESG investment frameworks.
It bears emphasizing that the rule the GOP wants to overturn amounts to a promise that, if your business wants to take climate risk into account, government won’t punish you for doing so.
But today’s Republicans insist that concern for climate is a “far left” marker. Today’s GOP has totally abandoned its previous respect for private enterprise and limitations on legislative authority. The party used to be animated by the libertarian principle that government should be limited to protecting citizens against harm. Americans can and do differ about the nature of the harms that justify government intervention, but things like caring about the environment, reading the “wrong” books, or loving the “wrong” people, were not (at least officially) among them.
Some of this anti-climate fervor reflects the worries of fossil fuel companies, of course, and those companies are big donors to the GOP lawmakers driving this exercise. Still, we shouldn’t dismiss the political motives behind this propaganda. As the Axios article notes, Republicans are trying to reach swing voters by labeling anything climate-conscious as being part of a far-left agenda.
If recognition of climate change is “leftist,” my belief that words have fixed meanings is swirling like the water around the drain in my toilet…
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