MIDLAND, Mich. — Labor unions frequently use worker retirement funds and political influence to support political causes that hurt their own members, the Mackinac Center for Public Policy reports in a new study. Union political efforts harm union members while putting both pensions and taxpayers at risk.
The new report “Unions and ESG: From Worker Representation to Shareholder Activism,” explains how organized labor backs Environmental, Social and Governance (ESG) investing principles. Under ESG principles, fund managers no longer make investment decisions based solely on financial returns for their clients, instead considering unrelated environmental and social issues such as climate policies and corporate diversity efforts.
The report argues that ESG investing can steer money away from the most profitable opportunities in favor of political priorities. That could mean lower returns for workers who rely on these funds for retirement. It also reduces investment in certain industries that employ members of the union, such as oil, gas, trucking, and nuclear energy.
Because many of these pension funds are tied to public employees — teachers, police officers, and other government workers — the impact doesn’t stop there. If investments underperform, taxpayers may have to make up the difference through higher taxes, reduced services or more government debt.
The report also highlights a fairness concern: Not all union members agree with the political causes tied to ESG investing, yet the union uses their retirement savings to support them.
The report offers several recommendations policymakers can follow to address these concerns:
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Require pension managers to focus only on financial returns — not political or social goals.
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Avoid doing business with firms that boycott certain industries for political reasons.
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Prevent the use of ESG-style scoring systems in government decisions.
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Increase transparency so workers and taxpayers can see how investment decisions are made.
“Unions should focus on collective bargaining, not capital activism, and public pension systems shouldn’t be held hostage to causes many of their members don’t support,” said Jarrett Skorup, vice president of marketing and communications at the Mackinac Center for Public Policy and author of the report. “Retirement fund investments are about providing stability for retirees and should have one goal: delivering the best financial return within the law, not advancing political agendas. Workers need to know their savings are being managed responsibly and aren’t being used for activism.”
The full report is available here.
