The Securities and Exchange Commission (SEC) imposed a $1.5 million penalty on BNY Mellon for “misstatements and omissions” concerning its Environmental, Social, and Governance (ESG) goals for various mutual funds the investment bank oversaw.
The ESG movement assigns “scores” to companies based on their adherence to “socially conscious” behaviors. A company may, for instance, seek ways to implement green energy, impose quotas for hiring racial minorities, or otherwise arrange its operations such that producing shareholder value is inseparable from a progressive agenda.
However, the SEC said last week that BNY Mellon’s investment adviser practice “represented or implied in the various statements that had presented an ESG quality review between July 28 and September 201, even though that was not always the case. ”
“Registered investment advisers and funds are increasingly offering and evaluating investments that employ ESG strategies or incorporate certain ESG criteria, in part to meet investor demand for such strategies and investments,” Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement and head of its Climate and ESG Task Force, said in a statement. “Here, our order finds that BNY Mellon Investment Adviser did not always perform the ESG quality review that it disclosed using as part of its investment selection process for certain mutual funds it advised.”
Though many investors and executives want companies to advance certain political and social causes beyond their bottom lines, an exclusive Daily Wire poll conducted by Echelon Insights showed last week that most Americans want companies to invest in to stop preaching and instead pursue profits.
While 29% of respondents agreed it is a “good thing” for companies to leverage their financial power for political or social means supported by executives, 58% — twice as many — said it is a “bad thing.” The Daily Wire poll found that most investors prefer to focus on profits instead of ESG when they choose their own assets — and most believe that other investors should have the same opportunity.
In an interview with “Morning Wire,” entrepreneur Vivek Ramaswamy said the poll shows there is a “distinction” between current investors and investment institutions — and the former are tired of the latter tipping the scales of the political debate without their consent.
“This is not a right or left-wing issue,” Ramaswamy, the founder of the asset management firm Strive, explained. “That’s why you see a two-to-one ratio here.”
Ramaswamy observed that even for progressive investors who want to see their favorite causes advanced, the best way to do so is not through a corporate entity.
“The way you would want to do it is to generate wealth for yourself that you can donate philanthropically,” he said. “And the way you generate wealth for yourself is through a capital market that most effectively enhances return. But what you’re doing through a politicized economy is effectively handing that power over instead to a small group of investment institutions, to the corporate boardrooms of this country that aren’t even the most effective ways of advancing your political agenda, even if you wanted to — say, from the progressive side or from the left-wing side.”
The “No ESG at TSP Act,” a bill proposed by Rep. Chip Roy (R-TX) the day after The Daily Wire poll was released, would stop the Thrift Savings Plan (TSP) — a retirement savings plan for federal employees and the largest defined contribution plan in the world — from flowing into ESG funds.
“ESG investing is a woke scam. It restricts the free flow of capital, undermines US energy freedom to the benefit of our enemies, and awakens racial and gender ideologies intent on dividing the republic,” Roy said in a press release to The Daily Wire. “The upcoming changes to TSP would allow billions of taxpayer dollars to serve these ends. The federal government shouldn’t have any part in this radical nonsense, and especially shouldn’t be using your money to do it.”