Treasury Bars ESG Funds From Trump Accounts Over 'Political Activism' Concerns
Key Takeaways
- •The Treasury proposal would exclude investment funds based on environmental, social and governance criteria from Trump Accounts.
- •The rules would also require investment options to carry low fees and meet broad-market index standards based on objective financial criteria.
- •Trump Accounts launched on July 4 and have since surpassed 7 million family sign-ups, according to Treasury.
- •More than 2 million enrolled accounts are eligible for the federal $1,000 seed deposit for children born between the start of 2025 and the end of 2028.
- •Treasury said more than $1.5 billion has been contributed by individuals and pilot programs since launch, excluding philanthropic contributions.
The Treasury Department moved forward Thursday with new rules for investments in Trump Accounts that would exclude investment funds rooted in environmental, social and governance (ESG) criteria, FOX Business has learned.
The restriction on ESG funds comes alongside companion rules ensuring that investment options in the accounts carry low fees, a step intended to let investors keep more of their money.
"Corporate America has rejected ESG ideology, and we will not allow it to be a part of Trump Accounts," Treasury Secretary Scott Bessent told FOX Business in a statement.
"These accounts exist to build financial security for America's children, not to advance political activism or ideological agendas," Bessent added.
A Treasury Department official told FOX Business that under the proposed eligibility framework, an index would have to be designed primarily to measure the performance of a broad segment of the U.S. or global equity market using objective financial criteria — an approach akin to the low-cost index funds offered to federal employees through the Thrift Savings Plan.
The rule is intended to give families clear, transparent investment choices focused on cost, diversification and long-term financial performance. ESG funds have faced criticism for their emphasis on other criteria — such as companies' environmental and social policies or their governance structures — ahead of investor returns.
The Treasury decision is the latest flashpoint in a yearslong political fight over ESG, which grew into a multitrillion-dollar global investing strategy before drawing a backlash from Republican-led states that passed laws limiting ESG considerations in public investment decisions and pulled assets from some large money managers — and from federal agencies under Trump, which have moved to unwind Biden-era rules that allowed retirement plan fiduciaries to weigh ESG factors. Several major asset managers have also retreated from the ESG label in recent years as fund inflows cooled. The rules are at the proposal stage, meaning they typically face a public comment period before taking effect — a window in which fund companies and trade groups can weigh in on how eligibility is defined.
Trump Accounts — the tax-advantaged investment accounts for children created under President Donald Trump's sweeping tax and spending law — officially launched on July 4, and a Treasury spokeswoman said that in the month and a half since the launch, the number of families who have signed up has risen above 7 million. Over 2 million of those enrolled to date are eligible for the $1,000 seed fund from the federal government, which is available for children born between the start of 2025 and the end of 2028 under the One Big Beautiful Bill Act.
Trump Accounts may also be created for children under the age of 18, although those born outside the 2025-to-2028 window are not eligible for the government's seed money. Annual contributions are capped at $5,000 per child, a limit that adjusts with inflation, and money goes in after tax — with investment gains taxed at capital-gains rates when withdrawn, a structure designed to let balances compound over decades.
The Treasury spokeswoman also noted that since the launch there has been over $1.5 billion in investment contributions from individuals, as well as contributions from pilot programs. That figure does not include philanthropic contributions, such as the $6.25 billion contributed by billionaires Michael and Susan Dell, who helped fund $250 initial seed deposits into accounts for children under age 10.
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