President Joe Biden vetoed legislation on Monday that would have overturned a Labor Department rule allowing retirement fiduciaries to invest in accordance with the environmental, social, and corporate governance movement, also known as ESG.
The Labor Department issued a final rule last year that reflected the Biden administration’s purported efforts to safeguard the economy from “climate-related financial risk that may threaten the life savings and pensions of America’s workers and families.” Under the new rule, which reverses a prohibition created under the Trump administration, fiduciaries are allowed to weigh “the economic effects of climate change and other ESG considerations” as long as the concerns are relevant to a risk-and-return analysis.
The veto, which is the first issued by Biden, overturns a resolution passed by Republicans and a handful of Democrats in order to nix the rule. Sen. Jon Tester (D-MT) and Sen. Joe Manchin (D-WV), both of whom are campaigning for re-election next year in heavily Republican states, voted alongside their GOP colleagues to advance the measure.
“There is extensive evidence showing that environmental, social, and governance factors can have a material impact on markets, industries, and businesses. But the Republican-led resolution would force retirement managers to ignore these relevant risk factors, disregarding the principles of free markets and jeopardizing the life savings of working families and retirees,” Biden said in a message to lawmakers released on Monday. “In fact, this resolution would prevent retirement plan fiduciaries from taking into account factors, such as the physical risks of climate change and poor corporate governance, that could affect investment returns.”
via joemiller
