Retirement is hard enough. Why add politics to it?

Economists and business leaders are talking about inflation and recession. Political uncertainty is rising in anticipation of the presidential election in November. Investment experts are warily watching the future of Social Security, personal savings rates, and the shrinking number of workers with pensions. Most Americans – even those who think they’re properly prepared for retirement – fear they will outlive their savings and investments.

Current and future retirees have plenty to be anxious about. But for those in public service, there’s another reason to fret: Elected officials bringing culture-war politics into public pension investing, blacklisting investment advisors and banks seen as hostile to lawmakers’ favored industries.

Most legislation is aimed at financial firms that consider environmental, social, and governance factors (ESG) when they make investments. In a few states, lawmakers’ ire is aimed at firms that don’t include ESG factors. Making most of the headlines is the anti-ESG legislation aimed at firms that aren’t investing in favored industries, like firearms and oil and gas.

The elected and appointed officials focusing on this type of legislation are taking their eyes off the ball. Pensions and public finance are supposed to be about maximizing profits, protecting capital, increasing returns for people dependent on public pensions, and cutting costs for taxpayers.

It’s no place for politics!

Many public employees – including firefighters, police, and other first responders – aren’t eligible for Social Security. Their public pensions and personal savings are all they have for their retirements. It’s safe to say they’re not looking for new risks, no matter what their personal politics are.

Others have some personal savings and Social Security in addition to their public pensions, but it doesn’t make sense to tamper with that three-legged stool of retirement, either.

Americans need to save more for retirement, whether they have pensions or not. The federal government needs to make sure Social Security remains solvent for the people who are and will be depending on it. Those counting on public pensions should be able to trust the people in charge to take care of their investments and to ensure their pensions will remain healthy enough to enjoy their Golden Years.

Everyone from the politicians to the current and future retirees has a part to play in this critically important area of finance. It’s hard enough to feel secure about retirement without playing political games with pensions.

ESG legislation in 2024

So far this year, states have introduced 103 anti-ESG measures, approving six, according to a report from Pleiades Strategy, a pro-ESG consulting group. Two more bills passed that were carried over from 2023, they noted. In 2023, 29 laws and resolutions opposing the use of ESG factors in public finance and investment were enacted.

Pleiades notes in their report that opposition to many of the anti-ESG bills includes various groups that don’t ordinarily work together, “including business groups, financial officers, investors, labor unions, libertarians, taxpayer advocates, racial justice advocates, and environmentalists.”

“In pushing against anti-ESG bills this session, these diverse constituencies regularly brought attention to the high costs existing laws are exacting on state residents and businesses. Such laws already have cost residents in states like Texas and Oklahoma hundreds of millions of dollars that could have been used to finance community projects, city infrastructure, and other needs,” they wrote.

Opponents like those were able to water down some of the state bills, Pleiades reported, adding opt-out provisions for state pensions when the blacklists prove too expensive, for example. But the analysis said the new anti-ESG laws, even when diluted, have had “a chilling effect on corporate dialogue on key issues, such as climate change and diversity, equity, and inclusion.”

The report also includes a listing of the organizations that have been drafting and/or advocating for anti-ESG legislation in various states, including the Foundation for Government Accountability, the Alliance Defending Freedom, the National Shooting Sports Foundation, the Heritage Foundation and Heritage Action, the Heartland Institute, and the State Financial Officers Foundation.