In late March, 2023, President Biden issued the first veto of his Administration. The veto overturned a Republican led measure that was seeking to overturn a Department of Labor retirement plan rule.
Pretty wonky stuff you say?
The Republican measure was designed to overturn a Labor Department rule that would allow (note the word allow, NOT mandate) retirement plan managers to consider climate change in making their investment decisions.
Sounds like some double speak there doesn’t it? The Department of Labor rule was enacted to “permit” investment managers to consider climate change in making decisions. The rules did NOT require this consideration, rather, it permitted it at the discretion of the investment manager.
Congress (in a House vote of 216-204 mostly along party lines and a Senate vote of 50-46 with Democratic Senators Manchin and Tester voting with their Republican colleagues,) voted to overturn the Department of Labor Rule – effectively saying, investment managers should NOT be permitted to consider what some view as relevant information in making an informed decision (e.g., if an area floods daily, should one invest in an asset located there or instead invest where there is not a flooding risk; alternatively, if an area is prone to forest fire risk vs. an area that is not prone to this type of risk, should a manager be able to consider this if they think it relevant?).
The Administration took issue with the overturned Labor Department rule and opted to veto the Congressional restriction on being able to consider climate change in investment manager decisions. Again, as noted above, the Labor Department Rule does NOT require every or any investment manager to consider climate change in their investment decisions, instead it enables these managers to choose how they view climate change, and if they believe climate change to be a relevant factor in making an investment decision, to take it into account when making their decision.
This is likely the first of many such skirmishes to come on the ESG front and its use as a tool or a hammer, depending on your perspective, in making decisions.
Parting Thoughts – if you are an investor looking to deploy your investment dollars, the question is whether you think your investment advisor should be able to (without being required to) take into account climate factors when making investment suggestions to you or not. How and whether resiliency, climate factors, resource allocation and applicable risk mitigation is permitted or mandated into future investment decisions are some of the areas where it is highly likely that additional political party skirmishes will occur.
Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. We would be happy to discussion your proposed project and how this DOE funding prize might apply to you. For more information or if you have any questions about this post, please contact Brad A. Molotsky, Alice Shanahan, Jeff Hamera, Nanette Heide, Jolie-Anne Ansley, Robert Montejo, Seth Cooley or David Amerikaner or the attorney in the firm with whom you in regular contact or the attorney in the firm with whom you are regularly in contact.
ESG – What is included the Inflation Reduction Act?
Earlier this week the President signed into law the Inflation Reduction Act. Without pontificating on its virtues or short comings, here is how the Inflation Reduction Act breaks down by the numbers:
HEALTH CARE:
Cutting Prescription Drug Cost
As estimated by the office of Management and Budget:
5-7 million Medicare beneficiaries could see their prescription drug costs reduced because of the provision allowing Medicare to negotiate prescription drug costs;
50 million Americans with Medicare Part D will have their costs at the pharmacy capped at $2,000 per year, directly benefiting about 1.4 million beneficiaries each year;
3.3 million Medicare beneficiaries with diabetes will benefit from a guarantee that their insulin costs are capped at $35 for a month’s supply.
Lowering Health Care Costs – per the White House:
13 million Americans will continue to save an average of $800 per year on health insurance premiums under Obama Care;
3 million more Americans will be eligible for health insurance; and
The current uninsured rate is at an all-time low of 8%.
CLEAN ENERGY:
Lowering Energy Costs
$14,000 in direct consumer rebates for families to buy heat pumps and other energy efficient home appliances;
a 30% tax credit for solar on roofs program, saving families and estimated $9,000 over the life of the system or at least $300 per year;
Up to $7,500 in tax credits for new electric vehicles and $4,000 for used electric vehicles, helping families save $950 per year – noting there are requirements that various parts of the car be made in America which at this time is not part of the supply chain;
The Administration has stated that their goal in the IRA is to power homes, businesses, and communities with much more clean energy by 2030, including adding:
950 million solar panels;
120,000 wind turbines;
2,300 grid-scale battery plants;
Advance cost-saving clean energy projects at rural electric cooperatives serving 42 million people;
Strengthen climate resilience and protect nearly 2 million acres of national forests; and
Creating millions of good-paying jobs making clean energy in America.
Reducing Harmful Pollution
The hope is that through these actions, the IRA will help reduce greenhouse gas emissions by about 1 gigaton in 2030, or a billion metric tons – 10 times more climate impact than any other single piece of legislation ever enacted.
Moreover, the Administration is incenting carbon capture technology in order to deploy clean energy and reduce particle pollution from fossil fuels to avoid up to 3,900 premature deaths and up to 100,000 asthma attacks annually by 2030.
Fuel For Thought – while some argue that the IRA is too expensive and that carbon reduction goals are not necessary, others view these steps as a good step but not nearly enough to reduce green house gas emissions as set forth in the Paris Accord by 2030. Wherever you come out on this topic, taking steps to reduce our own personal greenhouse gas impact are within our own power. As such, if you don’t believe that humankind contributes to green house gas impacts and global warming then try doing something to help your own personal reduction to support those that really believe this is a serious issue. Your own reduction cannot hurt and it just might help if we all engage and look to help.
Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. We would be happy to discussion your proposed project and how the Inflation Reduction Act might apply with you. For more information or if you have any questions about this post, please contact Brad A. Molotsky, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ainsley, Robert Montejo, Seth Cooley or David Amerikaner or the attorney in the firm with whom you in regular contact or the attorney in the firm with whom you are regularly in contact.