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Republican anti-ESG push complicates faith-based impact investing
As heat waves blazed across the U.S. in July, what was later declared the hottest month on record, House Republicans held a series of hearings grilling investment practices based on environmental, social and governance criteria, or ESG.
The monthlong inquiries, aimed at what conservative lawmakers and their allies call "woke capitalism," produced an unexpected target of interest: Seventh Generation Interfaith Coalition for Responsible Investment, a contingent of 40 faith-based institutions, mostly Catholic congregations of women and men religious.
Letters from the House Judiciary Committee sought all communications and documents the world's largest proxy adviser firms — Institutional Shareholder Services and Glass Lewis — and others had with Seventh Generation Interfaith Coalition and fellow shareholder engagement organizations, alleging they may have colluded and violated U.S. antitrust law in advocating American companies to decarbonize their assets and achieve net-zero greenhouse gas emissions in their operations.
It was the second time in six months Seventh Generation Interfaith was named by conservative politicians investigating ESG-guided investing. A March letter from Republican attorneys general for 21 states lumped the faith investing coalition among "some of the most radical ESG activists" who use shareholder resolutions to press companies to align with the goals of the Paris Agreement on climate change and reach net-zero emissions globally by 2050 to wean economies worldwide off the use of fossil fuels.
Related: To protect the Earth and its people, religious orders invest in climate solutions
"Indeed, pressuring companies to reach zero commitment is one of the most radical active investment strategies imaginable," the attorneys general wrote, calling shareholder proposals targeting banks an attempt "to cut off funding to business in our states that may be out of step
WASHINGTON — Wages and benefits grew at a slightly faster pace in the July-September quarter than the previous three months, a benefit for workers but a trend that also represents a risk to the Federal Reserve’s fight against inflation.
Compensation as measured by the Employment Cost Index increased 1.1% in the third quarter, up from a 1% rise in the April-June quarter, the Labor Department said Tuesday. Compared with a year ago, compensation growth slowed to 4.3% from 4.5% in the second quarter.
Adjusted for inflation, total compensation rose 0.6% in the third quarter compared with a year earlier, much slower than the second-quarter increase of 1.6%.
By some measures, average pay cooled, economists pointed out. Wages and salaries for private sector workers, excluding those who receive bonuses and other incentive pay, rose 0.9% in the third quarter, down from 1.1% in the previous period.
Fed officials consider the ECI one of the most important measures of wages and benefits because it measures how pay changes for the same mix of jobs, rather than average hourly pay, which can be pushed higher by widespread layoffs among lower-income workers, for example.
Growth in pay and benefits, as measured by the ECI, peaked at 5.1% last fall. Yet at that time, inflation was rising much more quickly, reducing Americans’ overall buying power. The Fed’s goal is to slow inflation so that even smaller pay increases can result in inflation-adjusted income gains.
Fed Chair Jerome Powell has indicated that pay increases at a pace of about 3.5% annually are consistent with the central bank’s 2% inflation target.
While higher pay is good for workers, it can also fuel inflation if companies choose to pass on the higher labor costs in the form of higher prices. Companies can also accept lower profit margins or boost the efficiency of their workforce, which allows them to pay more without lifting prices.
Retirement plans are changing in 2025: What to know
If you are nearing retirement, you will soon be able to stash even more money into your nest egg -- if you can afford it.
The Internal Revenue Service announced that the maximum amount individuals can contribute to their 401(k) or similar plans in 2025 will increase to $23,500, up from $23,000 for 2024.
The federal government already lets those 50 and older make extra contributions so that they can save more as they near retirement age. This is known as a "catch-up" contribution.
In 2025, the standard catch-up contribution will stay the same, with a max of $7,500, according to the IRS.
But starting next year, workers ages 60 to 63 will be able to make “super” catch-up contributions, up to $11,250 annually, which is an additional $3,750.
That means they can potentially contribute up to $34,750 in total, each year, to a workplace retirement account.
The substantially higher catch-up contributions are part of SECURE 2.0, which President Joe Biden signed into law in 2022 as part of a $1.7 trillion omnibus spending package.
“While anything that encourages more investing is generally a good thing, I'm afraid this rule change probably won't make a big impact, " Bankrate's Senior Industry Analyst Ted Rossman, told ABC News. “There has to be a very small population between the ages of 60 and 63 who were maxing out their accounts and can now go higher.”
In 2023, just 14% of retirement plan participants maxed out their 401(k) limits, according to Vanguard Research.
Even those who have always maxed out their retirement savings contributions may need to reallocate funds as they age and start to face extra expenses, like sending children to college or caring for aging parents.
Aside from 401(k) plans and similar employee-sponsored plans, the limit on annual Individual Retirement Account contributions is unchanged next year, at $7,000, while the catch-up contribution for peopl .