From the “why doesn’t this surprise me?” department, courtesy of Bill Wilson and Americans for Limited Government:
Americans for Limited Government President Bill Wilson has called upon Labor Secretary Elaine Chao to launch an immediate investigation into plans by a coalition of union officials and environmentalists to raid employee pension funds in order “to pursue a dubious political agenda.”
Wilson’s call came in a letter to the Secretary hand delivered on Tuesday, December 30th. In the letter, the ALG executive warned that the announced union/environmentalist action directly violates Employment Retirement Income Security Act (ERISA) provisions by draining working pension funds to wage a political war on global warming. The letter specifically cites the Investor Network on Climate Risk (INCR) as culpable in what he terms an “elaborate shell game.”
The INCR’s Action Plan has 49 signers, including leaders of pension funds, union officials, state treasurers, state and city comptrollers, financial service firms, asset managers, and foundations.
(snip)
Dating back to December of 2007, the Department of Labor has repeatedly informed union officials that it rejects “a construction of ERISA which would rend the Act’s tight limits on the use of plan assets illusory, and which would permit plan fiduciaries to tap into ERISA trusts to promote myriad public policy preferences….”
Wilson’s letter to Secretary Chao calls upon the Department of Labor to ensure that the union/environmentalist coalition properly acts in the best interests of participants and beneficiaries under the plan. It states, “We urge you to take the actions necessary to ensure the fiduciaries within your jurisdiction are complying with ERISA… and are investing solely for the benefit of the participants and beneficiaries of their plans.
Wilson noted that that the success of the investment strategy, by its own admission, is actually necessarily tied to restrictions in carbon emissions that the federal and state governments have yet to enact, thus posing greater uncertainty and risk to investors.
“The INCR with its Big Labor and state participants create the very financial risks to investors its own action plan portends to reduce,” said Wilson in a statement. “In the process, it is putting the retirement savings and investments of thousands of investors, workers, and retirees in jeopardy by tying financial returns to projected government actions that have not yet taken place, and to a disputed science that may not be factual.”
The union/environmentalist plan ostensibly seeks to “reduce climate risks” in investor portfolios by requiring investments to consider climate risk, investing capital in “developing and deploying clean technologies”, reducing by 20 percent energy use in real estate portfolios, and to support policy actions to enact a “mandatory national policy to contain and reduce national greenhouse gas emissions economy-wide, making sizable, sensible, long-term cuts in accordance with the 60-90% reductions below 1990 levels by 2050 that scientists and climate models suggest are urgently needed to avoid the worst and most costly impacts from climate change.”
Wilson contends that “reducing climate risk” is not the real intention of the investment plan, nor should it be allowed even if it were. “This amounts to an elaborate shell game to reduce carbon emissions by endangering retirements,” he said.
“All of which has nothing to do with protecting the savings of investors from risk to their portfolios,” Wilson added.
Wilson warned that left unchecked, “[t]his green-union pension raid will not only endanger workers’ retirement benefits, but the greater economy. The American people have yet to seriously question the cost of going green.”
There are a couple of things which stick out in the information provided within the links.
First is that one of the 49 signatories to the INCR Action Plan is our own State Treasurer, Nancy Kopp. Little surprise there; in fact I’m more shocked that Peter Franchot didn’t jump on board too.
However, the second item is noticing the Action Plan dates back to early last year by my reckoning. Unfortunately, Secretary Chao is going to be replaced by an Obama appointee soon, his initial pick was California Congresswoman Hilda Solis. Her selection was praised by labor leaders so you can bet your bottom dollar Wilson’s request for an investigation will be quickly shelved once Solis takes over, assuming she’s confirmed.
Living once upon a time in a state where pension fund investment in non-traditional avenues became a celebrated scandal (I’m reaching waaaay back in the archives for this one, all the way back to my old blog), the question of whether this investment is appropriate given ALG’s concern is valid; unfortunately we can see just how much of a story this has become in the media because Wilson and ALG are seemingly the lone voices bringing this up.
It’s quite possible that the best route to circumvent this is a similar route taken against Maryland’s so-called Fair Share Act in 2006 – through the court system. There was another case where the ERISA statute came into play, but for a completely different reason. In this case, it may be much more appropriate because the signatories and their pension funds represent a number of different states.
Where Wilson is absolutely correct is citing the dubious science of manmade climate change, particularly when the INCR Action Plan openly supports government action to combat it. In general, the solution sought is one of draconian, job-killing restrictions on industrial and human activity which would do little to stop global warming even if it were present. Of course, an end result which balances the monetary gain possible from increased energy efficiency with the demands of those who want to attain a higher standard of living has been well-achieved by the free market for decades. And where efficiency ran into limits, until recently bold entrepreneurs were encouraged to seek new and better energy sources and supplies.
The push away from those items which were tried-but-true, such as incandescent light bulbs and domestic oil, has accelerated over the last decade as liberal environmentalists (as I repeat myself) demand substitutes which are more expensive and/or require heavy subsidies to remain viable in the market, such as compact fluorescent light bulbs or electric-powered cars. Until then, it seemed that technology and innovation flowed naturally – in less than a normal lifespan we went from our first flight to walking on the moon.
And while it can properly be argued that the latter achievement came as a result of federal government involvement, the same is not true within the evolution of wireless technology or in the manufacture of thousands of goods one uses on a regular basis. In most cases, we’ve advanced without needing a subsidy – only recently has the norm become going to the Beltway bureaucrats and lawmakers with outstretched hands.
Regardless, asking for the financial security of retirees to be based on the risky schemes and straight-up lobbying that the INCR Action Plan suggests is far from proper fiduciary prudence. Wilson is correct to be calling for an investigation and for action, but I fear he is far too late.
