Set against the backdrop of the US Department of Labor building, the tension between conservative and progressive ideologies reveals itself through the policy contrasts between President Joe Biden and former President Donald Trump, specifically regarding environmental, social and governance (ESG) rule considerations and diversity, equity, and inclusion efforts.
Initiatives like Project 2025, backed by the conservative Heritage Foundation, bring to the fore the variances in approach and outlook between the two major parties. Central to this dialogue is the Department of Labor’s (DOL) regulation of Employee Retirement Income Security Act (ERISA).
The interpretation of ERISA, enacted in 1974 to regulate investments for fund managers, has always been at the forefront of progressive versus conservative debates when discussing environmental issues and investment strategies.
In line with his platform, President Trump in 2020 favored an ERISA rule that stated investments should be based solely on “pecuniary factors.” However, in 2022, President Biden’s administration ushered in a new era where ESG factors could potentially be factored in as a tiebreaker to determine investments.
Although the Republican-controlled Congress attempted to override Biden’s 2022 rule, President Biden successfully vetoed the override, leaving the rule in effect. Yet, in a move demonstrating the dichotomy of political beliefs, Project 2025 aims to dismantle the rule, hinging its ideologies on the everyday American worker slipping under the radar of left-leaning human resources bureaucracies, climate activists, and union bosses.
Managed by the Heritage Foundation, Project 2025 aligns comfortably with the conservative perspective as outlined by former acting assistant secretary of policy at the Department, Jonathan Berry. In his chapter, Berry outlines a comprehensive critique of the DOL, the Equal Employment Opportunity Commission, the National Labor Relations Board, the National Mediation Board, the Federal Mediation, and Conciliation Service, and the Pension Benefit Guaranty Corporation.
Highlighting a strong aversion to the rise of diversity, equity, and inclusion policies, as well as critical race theory trainings, Berry is equally forthright in taking aim at ESG considerations under ERISA. Advocating for a return to the Trump Administration’s pecuniary-only approach to ERISA, Berry believes non-pecuniary factors such as ESG considerations related to climate change, racial quotas, abortion, and other issues have no place in ERISA.
Potentially reverberating with a second Trump term, the sentiments expressed by Berry appear to crystallize the conservative perspective regarding the ESG movement, diversity, equity, and inclusion efforts and the ERISA rule. As the political climate evolves, the future of ESG in American industries will hinge on the balance of power between progressive and conservative forces. Such policy contrasts will continue to shape the nation’s path on its journey towards ecological and corporate responsibility, all the while grappling with diversity, equity, and inclusion.
It remains to be seen how these debates will play out in future legislations, regulatory frameworks, and ultimately, the investment strategies towards shaping a more sustainable and inclusive corporate America.
