US policy: Key takeaways from our expert webinar

The 2024 elections initiated a seismic shift in US governance. In response, the PRI hosted a panel of experts in February to discuss what – and who – investors and other stakeholders should be watching this year.

Our panelists included Heather Slavkin-Corzo, former Policy Director at the Securities and Exchange Commission (SEC); Graham Steele, former Assistant Secretary of the Treasury for Financial Institutions; and Charlie Schreiber, former Senior Counsel of the House Committee on Financial Services. You can watch the full webinar online.

Here we summarise some of the key takeaways from the panel discussion as well as further policy considerations for signatories.

Key moves in the House and Congress

Evaluating the new Congressional leadership will be critical to understand the emerging policy agenda. Particularly, in the House, pay attention to Representative French Hill’s (R-AR) new leadership of the Financial Services Committee, and Representative Tim Walberg (R-MI) as Chair of the Education and Workforce Committee. On the Senate side, Senator John Thune (R-SD) has succeeded Senator Mitch McConnell (R-KY) as the Majority leader, and Senator Tim Scott (R-SC) has taken leadership of the Banking Committee.

House leadership of both the Oversight and Judiciary Committees are expected to continue inquiries on topics including net zero initiatives, proxy advisory firms, and ESG-related commitments and practices amongst investment managers and companies in 2025 and 2026.

Early actions from the new administration

The White House continues to set out administration priorities and set high-level policy for federal agencies. Policy direction is beginning to take shape via President Trump’s executive orders, including freezing federal spending on climate and energy infrastructure.

A question mark over international agreements

Panelists expected the new government to be sceptical of international agreements. President Trump has already withdrawn the US from the Paris Agreement, and many independent agencies have begun to retreat from international initiatives, such as the Federal Reserve’s exit from the Network for Greening the Financial System.

Graham Steele, former US Treasury Deputy Assistant Secretary for Financial Institutions, highlighted the potential risks of the US retreat from these initiatives, saying, “If you don’t have a seat at the table, you’re on the menu.” By leaving such groups, the US risks sacrificing its influence on international policy direction, further muddying the waters for investors seeking to understand how the US will fit into the global ecosystem.

More challenges for regulatory agencies

The Department of Labor’s “Prudence and Loyalty” rule, which supported private retirement plan fiduciaries’ ability to consider ESG information in certain circumstances, will continue to be a focal point for investors. A federal judge upheld the rule for a second time in February after finding that it did not violate federal law.

However, the upheld rule is already being scrutinised by the new administration. Republican officials have recently asked the SEC and the Department of Labor to adopt anti-ESG and DEI rules, citing the recent court decision in Spence v. American Airlines, which held that the American Airlines breached its fiduciary duty of loyalty by allowing its investment manager to pursue ESG interests when managing the company’s 401(k) plan. Conversely, Democratic officials have written to the SEC and Labor Department asking them to protect investors’ ability to consider ESG factors.

The Supreme Court’s overturning of the ‘Chevron deference’ doctrine in Loper Bright Enterprises v. Raimondo and the onset of the ‘Major Questions’ Doctrine will continue to significant change the judicial landscape.

• The ‘Chevron deference’ precedent held that courts should defer to federal agencies in interpreting laws written by Congress when they are unclear.
• The ‘Major Questions’ Doctrine is a legal theory that federal agencies should not be able to make policy on major questions of economic or social importance without explicit instruction from Congress.

Panelists agreed that the former attitude of “trust the experts” at regulatory agencies is no more. They anticipated a more uncertain operating environment for businesses, with federal rules being subject to further interpretation by numerous judges with differing interpretations, ideologies, and level of technical expertise.

They also noted that while President Trump recently signed an executive order directing federal agencies to, among other provisions, “identify at least 10 existing rules, regulations, or guidance documents to be repealed” when promulgating any new rule, in practice it is difficult to repeal existing rulemakings. Changes to existing rules – including deletion – can take many months or even years, often requiring detailed economic analyses, evidence that the agency actions would improve an existing issue, and formal consideration of comments from the general public.

A deregulatory agenda at the SEC

President Trump has nominated former Commissioner Paul Atkins for the position of SEC Chair. In the interim, Commissioner Mark Uyeda will serve as Acting Chair and is expected to pursue a pro-crypto, deregulatory agenda, a trend that is expected to continue under Atkins.

The SEC is also expected to reverse course on many of its previous priorities, including further corporate disclosures on human capital management and board diversity.

Early actions will almost certainly include ending support for the Commission’s landmark climate disclosure rule, which is currently subject to an administrative stay amidst ongoing legal proceedings. Acting Commissioner Uyeda recently requested that the Eighth Circuit Court not move forward with the case in order to allow the SEC to determine how it will proceed, while reiterating his and fellow Commissioner Hester Peirce’s opposition to the rule.

The SEC is also expected to reverse course on many of its previous priorities, including further corporate disclosures on human capital management and board diversity. The SEC has already issued staff-level guidance that reduces clarity on certain investor’s ability to engage with investee companies, as well as make it easier for companies to dismiss proposals offered by shareholders.

States as powerful actors

State and local policy makers and regulators also have an important role to play in building more sustainable financial systems.

We have written previously about the coordinated opposition to responsible investment in statehouses across the country, and panelists noted that many states have been prominent detractors of ESG. Panelists discussed, however, that increased anti-ESG attention from the federal government may prompt state leaders to further support ESG-related practices in their jurisdiction.

Our new policy briefing, Enabling State-Level Sustainable Financial Systems, shares five high-level practices that can serve as a baseline for any state seeking to build more sustainable markets that better support responsible investment. Such practices can help support diverse economies that are insulated from shocks and will provide long-term decent work.¹

Our mission remains the same

Panelists closed the webinar by imploring investors to continue to engage with policy makers and regulators. Investors were urged to share their expertise on issues, including climate risks, to ensure that policies reflect the complex reality of financial markets and the day-to-day practices of professional investment managers.

While the change in government brings a new era of policymaking, our mission remains the same. We will continue – as we have done for more than two decades – to engage with governments around the world to share the needs of investors and pursue the mission of creating a more sustainable financial system for all.

 

The PRI blog aims to contribute to the debate around topical responsible investment issues. It should not be construed as advice, nor relied upon. The blog is written by PRI staff members and occasionally guest contributors. Blog authors write in their individual capacity – posts do not necessarily represent a PRI view. The inclusion of examples or case studies does not constitute an endorsement by PRI Association or PRI signatories.