Senator Joe Manchin and a group of Republican colleagues have accused the US Treasury Department of putting pressure on state insurance regulators to factor in environmental, social, and corporate governance movement (ESG) issues.
According to the senators, the Federal Insurance Office is inappropriately influencing insurance companies and state-level authorities to look at climate change risks. The Office sought public consultation on the matter last August, before proposing a “problematic” data collection effort aiming to identify insurance coverage areas most vulnerable to climate-related risks in October. Though these actions don’t take the shape of formal rules, the senators believe they place pressure on state regulators and insurers to consider climate-risk mitigation policies. They claimed this could cause them to adopt ESG policies instead of carrying on with existing measures that manage policyholders’ exposure to changing weather patterns.
The senators’ letter to Treasury Secretary Janet Yellen stated that The Office’s data collection could contrast over 100 years of insurance regulation by individual states rather than the federal government. The letter argued that the Biden administration overlooked steps already taken by insurers and state insurance regulators to manage policyholders’ exposure to changing weather patterns, instead prioritizing the ESG-based policies. Other lawmakers that signed the letter were Sen. John Thune of South Dakota, Sen. Tim Scott of South Carolina, and Sen. John Barrasso of Wyoming.
The dissenting Republicans fan the flames of disagreements with the Biden administration’s efforts to promote ESG policies, with recent presidential veto decisions serving as a case in point. Overruling a resolution that would have ended a Labor Department rule on retirement fiduciaries to consider ESG factors when making investment decisions and casting votes on shareholder resolutions and board nominations, the veto didn’t sit well with Manchin, one of three Congress Democrats that supported the resolution. He argued that the rule deviated significantly from legislation that required fiduciaries to base investment decisions purely on financial factors.
Critics of the ESG movements fear that the philosophy combines political causes such as reducing carbon emissions in a way that undermines profits. According to a statement by Sen. Manchin, the Biden Administration’s persistent campaign to advance an “unrealistic environmental agenda” only exacerbates these concerns. ESG advocacy aligns with the administration’s politically-sensitive policies aimed at limiting carbon emissions from gas stoves and dishwashers, as well as curbing emissions from coal and natural gas-powered plants. Sen. Manchin has threatened to prevent every nominee sent to the Environmental Protection Agency until the power plant rules are reversed.