Sen. Joe Manchin (D-WV) joined forces with over three dozen Republican colleagues to claim that the Treasury Department is exerting pressure on state insurance regulators to take into account factors associated with the environmental, social, and corporate governance (ESG) movement.
A letter from members of the Senate noted last week that the Federal Insurance Office, which was created to “monitor all aspects of the insurance sector,” has attempted to improperly influence authorities at the state level as well as insurance firms to consider so-called ‘climate risk.’ The agency wanted public input on “how climate change could affect the insurance market” in August 2021 and proposed an “unworkable data collection effort” in order to see which “insurance coverage areas are most susceptible to climate-related risks” in October 2022, the Daily Wire reported.
“Though the FIO’s actions to date do not enact formal rules or regulations, they do place pressure on state insurance regulators and insurers themselves,” the letter sent to Treasury Secretary Janet Yellen said. “We are concerned that this may ultimately result in state insurance regulators and insurers feeling coerced into adopting one-size-fits-all climate-risk mitigation policies rather than building on existing efforts to mitigate risks and manage policyholders’ exposure to changing weather patterns as deemed appropriate by the insurers and state insurance regulators on the ground, which has served the industry and public well.”
The Federal Insurance Office’s data collection initiative aims to gather information on property and casualty insurance risks that are believed to be associated with climate change in different regions of the country. Last year, Yellen remarked that the consequences of Hurricane Ian in Florida highlight how “Americans are being affected by the increasing costs of climate change.”
The letter further stated that these actions have the potential to infringe upon over a century of established precedent, wherein insurance regulation has traditionally been under the purview of individual states rather than the federal government.
“The Biden administration is ignoring steps insurers and state insurance regulators are already taking and instead utilizing the FIO to continue pushing ESG policies as part of its unrealistic environmental agenda,” continued the letter.
In addition, the letter’s authors referenced a recent veto by President Joe Biden, where he overturned a resolution aiming to nullify a Labor Department rule. This rule enables retirement fiduciaries to take into account climate change and other ESG factors when making investment decisions and exercising shareholder rights, such as voting on shareholder resolutions and board nominations.
“The administration’s unrelenting campaign to advance a radical social and environmental agenda is only exacerbating these challenges,” Manchin said in a statement after the veto.
Notably, Manchin, who is up for re-election in a predominantly conservative state next year, was one of only three Democrats in Congress who supported the resolution, which sought to maintain previous regulations that mandated fiduciaries to solely consider financial factors when making investment decisions.
Critics of the ESG movement argue that it intertwines political agendas, such as reducing carbon emissions, in a way that undermines or diverts focus from profitability, which in turn can compromise the primary goal of generating financial returns.
