Joe Biden is expected to issue his first presidential veto after the US Senate voted Wednesday to overturn a Labor Department rule allowing pension funds to consider progressive principles in investment decisions.
The upper chamber of Congress is controlled by Biden’s Democrats but his party had three absentees and two rebelling members, allowing the Republicans to pass the measure by 50 votes to 46.
House Republicans cleared their version on Tuesday with help from a single Democrat but Biden has vowed to veto the resolution, which would bar retirement fund asset managers from taking environmental, social and governance (ESG) factors into account.
“This administration is willing to jeopardize the retirement of 152 million Americans, using their retirement savings to fund a political agenda,” said Republican Senator Bill Cassidy.
“Asset managers should only be prioritizing the best return when investing their client’s retirement savings. Congress’ action today demands the White House keep their hands off of Americans’ retirement savings.”
Democrat Jon Tester, one of the rebels — and who is up for reelection in 2024 — said the rule endangered retirement savings for families facing higher living costs, when lawmakers should be ensuring they were on the “strongest footing possible.”
The Labor Department reinstated the rule in November, undoing a push by former president Donald Trump to penalize fund managers considering climate change in their decision-making.
Democrats pointed out that the policy is neutral on how ESG factors are taken into consideration so long as the investment fund is meeting its obligations to its beneficiaries.
Major investment firms like BlackRock applauded the rule, which the Biden administration framed as a financial boost to investors concerned about climate risk.
But Republican-led states have been pressuring firms for supposedly boycotting oil and gas companies as part of “responsible” investment strategies — an accusation that has been denied by many of the CEOs singled out.
Florida Governor Ron DeSantis, seen as a likely 2024 Republican presidential candidate, said last year that basing investments partly on ESG practices was a sign of an unacceptable “ideological agenda.”
“This rule isn’t about saying the left or the right take on a given environmental, social, or governance issue is ‘correct,'” said Democratic Senator Patty Murray.
“It’s about acknowledging these factors are reasonable for asset managers to consider.”
Senate Majority Leader Chuck Schumer accused Republicans of undermining the free market and injecting “hard right ideology into private-sector decision making.”
“They say this is about wokeness, that this is a cult, that it’s some grave intrusion into finance. It’s the same predictable, uncreative, unproductive attacks they use for anything they don’t like,” he said.
Meanwhile environmental advocacy group the Sierra Club urged Biden to fulfill his promise to veto the “dangerous effort.”
#Senate #votes #override #Biden #progressive #investment #policy