Climate-friendly ESG investing gets a boost from House Democrats

A group of House Democrats launched the “Sustainable Investing Caucus” on Wednesday to promote climate-friendly investing to push back against Republican criticism of environmental, social and governance (ESG) investment principles that are “sparking ” to progressive capitalism.

The founders of the caucus, led by co-chairs Sean Casten of Illinois and Juan Vargas of California, said their purpose will be to educate other legislators about the potential benefits of green investing.

“Sustainable investment is here to stay. And as our economy continues to grow, Congress must work with regulators to ensure that market participants receive the information they need to make probable and ethical decisions in our capital markets,” said Mr. Vargas.

But Democrats also admit they are playing defense.

Republicans have waged a multi-trillion dollar war on ESG, with red states across the country divesting public pension funds from some of the world’s largest financial institutions and asset managers because Republican officials say ESG is anti-fossil fuel.

The caucus will no doubt clash with House Republicans, as the Republican majority plans to combat ESG with legislation and public hearings questioning Wall Street executives.

“We have to be honest: we are also creating this caucus for defensive reasons. One of the oldest rules in Washington is that losers cry more than winners,” Casten said. “When capitalism is working well but you’re not winning, you tend to call it awakened capitalism. It’s still capitalism.”

Rep. Seth Magaziner, a Rhode Island Democrat and former state treasurer, accused Republican-led states that have boycotted Wall Street firms and ESG investments of hurting working-class investors whose long-term financial well-being could be jeopardized.

“ESG investing attacks are attacks on workers who count on their investment managers to grow their wealth over time,” Magaziner said.

“Even if you don’t believe that incorporating ESG into the investment process will increase value over time, you should at least believe in the freedom of individuals to invest as they see fit. This is how capitalism is supposed to work,” he said.

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