Trump Administration Orders You Not to Invest Ethically

The Trump Labor Department this week issued an extremely important advisory to all of you with retirement accounts: do not, under any circumstances, try to invest your money ethically. Got it?

No, we are not exaggerating. The Labor Department, which has regulatory power over 401(k) retirement plans, formally declared this week that such plans should probably stay away from “ESG” funds that take into account environmental, social, and corporate governance factors when investing, rather than just raw, naked, evil financial returns. From the WSJ:

The department, which oversees 401(k) plans, said in a new bulletin that America’s companies “must not too readily treat ESG factors as economically relevant” to investing choices.

“It does not ineluctably follow from the fact that an investment promotes ESG factors, or that it arguably promotes positive general market trends or industry growth, that the investment is a prudent choice for retirement or other investors,” the department wrote in its guidance.

To be extremely clear about what is happening, this is a push by the US Labor Department to convince the people responsible for deciding where hundreds of billions of dollars are invested that they might be running afoul of the law if they allow some of that money to be invested in funds that try to pick their investments based on criteria that include extremely minimal definitions of social good. Another way to look at this is that the Trump Labor Department is trying to ensure that no financial penalties accrue to major companies that adopt the sort of poor environmental and social and ethical practices that define the politics of the Trump administration.