Rep. Comer Urges IRS to Address ESG Practices

House Oversight and Accountability Committee Chairman James Comer, R-Ky., is seeking information from the IRS regarding retirement plan administrators’ practices related to environmental, social, and governance (ESG) actions. He is investigating whether these actions violate the IRS’ “exclusive benefit” provisions.

The “exclusive benefit” rule, applicable to tax-sheltered retirement plans, states that all plan activities must solely benefit the plan beneficiaries.

“As part of an ongoing investigation into leftist activists’ efforts to enforce favored ESG policies, the Committee on Oversight and Accountability is scrutinizing state-sponsored pension funds for potential violations of the Internal Revenue Code related to investing for the exclusive benefit of their enrollees,” Comer wrote in a letter to IRS Commissioner Danny Werfel.

“The Committee is requesting specific information from the IRS to further its oversight in this matter.”

“Some state pension funds have recently engaged in actions that do not serve the exclusive benefit of employees, using plan assets and shareholder voting rights to push their own political agenda,” Comer expressed. “Administrators of blue-state retirement plans have aggressively utilized participant retirement assets’ voting rights to advocate anti-oil and gas policies, potentially violating the IRC’s exclusive benefit requirements.”

ESG, a set of standards assessing an organization’s environmental and social impact, is commonly utilized in investment settings but also pertains to customers, suppliers, employees, and the general public.