(MENAFN) President Biden has issued his first veto, rejecting a bill that would have eliminated a Department of Labor rule allowing retirement plan managers to consider environmental, social, and governance (ESG) factors in their investment decisions. In a statement announcing the veto, Biden cited “extensive evidence” showing that ESG factors can have a material impact on markets, industries, and businesses. He argued that the Republican-led bill would force retirement managers to ignore relevant risk factors, jeopardizing the life savings of working families and retirees.
Republicans have criticized the rule, arguing that ESG investing practices unfairly penalize industries such as oil and gas. However, Biden insisted that retirement fund managers should be able to consider any factor that maximizes financial returns for retirees across the country. He warned that the bill would prevent plan fiduciaries from taking into account factors like the physical risks of climate change and poor corporate governance that could affect investment returns.
The resolution was introduced in the GOP-led House by Republican Rep. Andy Barr and passed in late February, with one Democrat joining Republicans in supporting it. The Senate soon voted 50 to 46 to overturn the rule, with Democratic Sens. Joe Manchin and Jon Tester joining Republicans in support.
Biden’s veto sets up a potential showdown with House GOP leaders, who intend to hold a vote on overriding the veto. This would require the support of two-thirds of both chambers. House Speaker Kevin McCarthy criticized Biden’s decision, accusing him of wanting Wall Street to use hard-earned money to fund a far-left political agenda. He argued that this would hurt seniors and workers, especially after Biden’s reckless spending caused record inflation and rapid interest rate hikes.
Meanwhile, Biden has yet to say whether he will sign a measure that would declassify information related to the origins of the COVID-19 pandemic. The House and Senate both passed that measure unanimously. The president’s decision to veto the bill limiting ESG investing in retirement plans highlights the ongoing debate over the role of ESG factors in investment decisions and the impact of political ideology on retirement savings. As the battle over the veto unfolds, it remains to be seen how it will impact retirement fund managers and the investment decisions they make.
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