Finance pros knock Labor Department plan to limit sustainable investing

A new report from several groups shows strong opposition among asset managers, financial advisers and other industry actors to Labor Department plans to restrict sustainable investing — or ESG, for environmental, social, and governance.

Why it matters: The rule has transformed the Labor Department into a battleground over climate (though of course climate is just one part of ESG investing).

The analysis is from Ceres, Morningstar Research Services, the AFL-CIO, Interfaith Center for Corporate Responsibility, Impax Asset Management and others.

Why it matters: The rule has transformed the Labor Department into a battleground over climate (though of course climate is just one part of ESG investing).

Of note: The groups behind the study are active opponents of the rule, not dispassionate observers. But the results track with your Generate host's less rigorous review of the comment docket in recent weeks.

The other side: Labor Secretary Eugene Scalia says there's evidence that "when investments are made to further a particular environmental or social cause, returns unsurprisingly suffer."

• But the report is the latest analysis to dispute this and argues the expert input in the comment docket makes their case.
• The Labor Department "has not shown that a problem exists that is in need of regulatory action, either that plan fiduciaries have been inappropriately selecting ESG investments or that ESG-focused funds have given up returns in exchange for 'non-pecuniary' benefits," it concludes.

Go deeper: The stage is set for a battle on sustainable investing