In the 1984 Democratic presidential-primary campaign the front-runner, former vice president Walter Mondale, found himself seriously challenged by the political flavor du jour: Senator Gary Hart of Colorado. To get voters to think twice before abandoning him and jumping to Hart, Mondale, in a debate, used a very popular phrase from a fast-food advertisement. He cleverly asked, “Where’s the beef?” Voters carefully considered the question and realized that Hart was a lot more sizzle than steak, and Mondale comfortably won the nomination.

The current craze over ESG investing championed by some investment advisers has reminded me of the early swooning over the untested Senator Hart. Asset managers often apply supposedly “socially conscious” ESG — environment, social, and (corporate) governance — criteria to screen potential investments. Pension funds are the deep pockets for woke capitalism. But ESG or “sustainable” investing is anything but a slam dunk for pension beneficiaries. There are real risks, and many financial professionals have begun to raise serious questions about them.

In 1974, as a result of various pension scandals in the 1960s — many of them union-related (remember the Studebaker workers in South Bend, Ind.?) — a Republican president and a Democratic-led Congress came together to promise workers that their retirement savings would be managed with the utmost care. They went on to enact the Employee Retirement Investment Security Act (ERISA), which established that pension trustees owe to plan participants one of the highest duties known to law: that of a fiduciary.

Since 1994, four different secretaries of labor — two from each party — have issued what’s known as an “interpretive bulletin” (IB), providing guidance for investing in ERISA-managed funds in compliance with the statute. I refer to this as “IB ping-pong” because it is relatively easy for one administration to respond to another administration’s IBs without soliciting formal stakeholder input. In 2020, however, Secretary Eugene Scalia decided that the De­partment of Labor (DOL) should undertake formal rulemaking under the Ad­ministrative Pro­cedures Act — which requires the solicitation of comments from the public — and provide more-enduring certainty to the regulated community and America’s retirees.

The department received over 1,500 comments and revised and tailored a final rule, published last November, that was in part based on them. The rule reminds plan providers that it is unlawful to sacrifice returns or to accept additional risk through investments intended to promote a social or political end. It allows for the inclusion of an ESG fund among other investment options, provided that it is selected based on pecuniary considerations. But ESG factors are often touted for nonpecuniary reasons, as addressing social welfare more broadly. That may appeal to some in­vestment advisers, but it is inappropriate for an ERISA fiduciary managing other people’s retirement funds.

Unfortunately, in March the Biden Labor Department announced that it would not enforce the final rule or pursue enforcement actions against any plan fiduciary for violating it. Ironically, the department — without an assistant secretary for the Employment Benefits Security Administration, a solicitor, or a deputy secretary — maintains that it had heard from a wide variety of stake­holders, including asset managers, labor organizations, plan sponsors, and in­vestment advisers. But the rule that the DOL published last November, titled “Financial Factors in Selecting Plan Investments,” wasn’t written just for those stakeholders. It was primarily written for the plan participants and beneficiaries — the people depending on the income once they retire.

In May, President Biden instructed Secretary of Labor Marty Walsh to consider publishing a proposed rule by September “to protect the life savings and pensions of United States workers and families from the threats of climate-related financial risk.” The explicit purpose of the DOL as enunciated in its enabling statute is to “foster, promote and develop the well-being of wage earners.” (Not that of asset managers.) One would think this required that the secretary of labor actually protect workers’ savings and pensions from investment advisers who want to speculate on risky, trendy, and expensive ESG financial products.

We should all keep in mind that annual expenses for so-called sustainable exchange-traded funds (ETFs) are more than ten times higher than those for the cheapest index funds, according to the financial-services firm Morning­star. As Jason Zweig, a well-respected financial analyst, recently wrote in the Wall Street Journal: “ESG is the last best hope for investment firms seeking to hang onto fat fees.”

The skeptics of ESG investing in­clude a growing list of distinguished financial experts, such as Alicia Munnell, executive director of the Center for Retirement Research at Boston College (“I really have no respect for ESG investing”); Tariq Fancy, former chief investment officer for sustainable investing at BlackRock, the largest asset manager in the world (“The financial services industry is duping the American public with its pro-environment, sustainable investing practices. This multitrillion dollar arena of socially conscious investing is being presented as something it’s not. . . . In truth, sustainable investing boils down to little more than marketing hype, PR spin and disingenuous promises from the investment community”); and Securities and Exchange commissioner Hester Peirce (“The first issue is we don’t even know what ESG means”; “Not only is it difficult to define what should be included in ESG, but, once you do, it is difficult to figure out how to measure success or failure”).

Recall that four years ago Japan’s $1.6 trillion Government Pension Investment Fund (GPIF) — the largest in the world — was putting significant amounts of money into ESG indices. In recent months, however, a senior director at GPIF was quoted in Bloomberg News as saying, “GPIF can’t sacrifice returns for the sake of buying . . . ESG names.” At issue was the recent poor performance of ESG funds, which is particularly worrisome to Japan in light of its aging population.

The recent American Rescue Plan passed by Congress included an $86 billion taxpayer bailout for about 124 financially troubled multi-employer pension plans. This was triggered not by bad decisions made by retirees but by the awful decisions, over a sustained period, of investment advisers, asset managers, corporate executives, and labor-union officials. The retirees ended up with the short end of the stick be­cause fiduciaries neglected their primary responsibility. True worker advocates should stand up for the current DOL rule, not run interference for investment managers taking a financial joyride with money that workers are setting aside for their retirement years.

Virtue-signaling with other people’s money is the icing on the cake of woke capitalism. Large sums of money accumulated from assembly-line workers, construction crews, independent contractors, and small-business owners are placed in the hands of fiduciaries who get to maximize risk rather than returns.

As for plan fiduciaries considering ESG factors when selecting investment options, they should curb their enthusiasm. The Biden administration’s ability to shield fiduciaries from legal exposure may be very limited without congressional action or a sudden change of heart by the Supreme Court, whose long-established ruling on the matter is that ERISA’s duty of loyalty requires fiduciaries to act for the exclusive purpose of providing financial benefits to participants. Fidu­ci­aries would be wise to act very prudently and document their decision-making processes. Otherwise, in a few years they may be asked by millions of angry and disillusioned retirees, “Where’s the money?”