The US Department of Labor has publicly condemned the OECD for “pushing members to politicise their pension systems by integrating ESG factors unmoored from returns”.
The Employee Benefits Security Administration, a DoL agency that oversees more than $14 trillion of the nation’s private retirement assets, launched a fresh attack on the OECD and its responsible investment principles for pension funds, declaring that it will withdraw support for such policies and that ESG is “nothing but a Marxist march through corporate culture”.
Justin Danhof, senior policy adviser at EBSA, delivered the searing words as part of a speech outlining President Trump’s pension investing priorities to an OECD pension conference in Paris on Tuesday to a gasping crowd, one source attending the event told Top1000funds.com.
Danhof, who is a staunch “anti-woke” crusader and previously called BlackRock, Vanguard and State Street “behemoth ideological cartel” over their ESG investment policies, said the US would not “support these policies, even tacitly”.
“ESG, at its core, looks a lot like a Marxist march through corporate culture. What is the point of Marxism? The complete destruction of capitalism,” Danhof said.
“If America and other OECD member companies hamstring our nations’ capital markets and pension systems with superfluous ESG costs, it only serves to benefit authoritarian regimes that do not engage in such frivolity,” he said.
“America faulted with ESG. We are now on the mend. We invite you to join us.”
Danhof also made a swipe at diversity, equity and inclusion which he said is a concept “that killed meritocracy leading to corporate mediocracy, which, in turn, sacrifices investment and pension returns”.
The US DoL, under the Trump administration, is seeking to roll back a Biden-era regulation which explicitly allowed private pension funds to consider ESG factors when investing assets under the Employee Retirement Income Security Act (ERISA). The Democratic rule already received several state-level challenges, including a lawsuit from a coalition of red states led by Utah in a Texas court, which was ultimately dismissed.
The DoL under Trump intends to finalise new rules by May 2026, which will require pension plans to invest “based only on financial considerations relevant to the risk-adjusted economic value of a particular investment, and not to advance social causes”, according to the latest EBSA regulatory agenda.
The US pension system will focus on the “exclusive purpose” of providing benefits to plan participants, Danhof said, highlighting the limited adoption of ESG investing in corporate retirement plans (ERISA qualified funds) as a result of its “clear standards” against “politically motivated investments”.
“That’s because ESG is not just some side-bar political or policy issue. It’s about sovereignty and security as well. Authoritarian leaders love when our member nations embrace ESG. Why? Because it lessens your prosperity and makes you less competitive,” Danhof said.
Danhorf’s criticism of the politicisation of pension investing should be viewed in the context of US public pension plans which have elected officials as board members and over recent years have been criticised for restricting or directing pension investments. [See The politicisation of investments at US public funds]
An OECD spokesperson declined to comment.
In a separate speech at the OECD conference on Thursday, the US Securities and Exchange Commission (SEC) chair Paul Atkins also took aim at the European Union’s sustainability reporting requirements for corporates, describing them as “prescriptive” and “burdens” to US companies.
“As Europe seeks to promote its capital markets by attracting more companies and investment, it should focus on reducing unnecessary reporting burdens on issuers rather than pursuing ends that are unrelated to the economic success of companies and to the well-being of their shareholders,” he said.
