Biden vows to veto Republican attempt to block DoL ESG rule
"This will be President Biden's first veto," predicted a spokesperson for Republican Senator Mike Braun, who has rallied support for the Senate measure from the chamber's 49 Republicans and Democratic Senator Joe Manchin.
28 Feb, 2023,
WASHINGTON: The Republican-controlled U.S. House is expected to vote on Tuesday on a bill to block President Joe Biden's administration from allowing retirement plans to consider environmental, social and corporate governance, or ESG, issues in their investment decisions.
Republicans believe they could have enough support to fast-track a companion bill and pass it in the Senate. That would force Biden, a Democrat, to decide whether to sign or veto the joint resolution that would prevent the Labor Department from enforcing a new ESG regulation.
"This will be President Biden's first veto," predicted a spokesperson for Republican Senator Mike Braun, who has rallied support for the Senate measure from the chamber's 49 Republicans and Democratic Senator Joe Manchin.
The measure is the latest salvo in the Republican culture war against the use of issues that promote environmental interests, social equality and corporate responsibility in business and investment decisions. The battle is only likely to intensify as the 2024 presidential campaign gets under way. Florida Governor Ron DeSantis, widely seen as a leading White House contender, has already made his own fight against "woke" businesses a hallmark of his image.
The Labor Department rule, which covers plans that collectively invest $12 trillion on behalf of more than 150 million people, makes it easier for plan managers to consider climate change and other environmental, social and governance factors when they make retirement investments and exercise shareholder rights, such as proxy voting. It also requires plans to pursue traditional financial considerations.
The Republican joint resolution stipulates that the rule "shall have no force or effect." "Retirement plans should be solely focused on delivering maximum returns, not advancing a political agenda," said Republican Representative Andy Barr, who introduced the House resolution. "If Congress doesn't block the Department of Labor's rule greenlighting ESG investing in retirement plans, retirees will suffer diminished returns on the investment of their hard-earned money."
The measure is widely expected to pass the House, where Republicans hold a slim 222-212 seat majority. Democrats control the Senate 51-49. But Democratic Senator Doug Fetterman is out for health reasons. It was not clear whether other Democrats would be absent. Two Democratic absences could give Republicans the simple majority necessary to pass the measure and send it to Biden's desk.
Braun is bringing the resolution under the Congressional Review Act, which bypasses the Senate's "filibuster" rule that requires the support of 60 senators to pass most legislation. The White House on Monday said that Biden would veto the bill.
"The rule reflects what successful marketplace investors already know – there is an extensive body of evidence that environmental, social and governance factors can have material impacts on certain markets, industries and companies," it said in a statement. Last week, 25 Republican-led states asked a federal judge in Texas to block the same rule, warning that the regulation could lead to millions of Americans losing retirement investments and harm state finances. Plaintiffs in the case include an oil drilling company and an oil and gas trade group.
