Biden vetoed and blocked bill against ESG for the first time
Joe Biden cast his first veto in his presidency, rejecting legislation that would have interfered with a rule allowing pension portfolio managers to consider climate change and other environmental, social and governance issues when making investment decisions.
“I just vetoed my first bill. This bill will put your retirement savings at risk by making it illegal to consider risk factors that MAGA House Republicans don’t like,” Biden tweeted Monday. “Your plan manager must be able to protect your hard-earned savings, whether Congresswoman Marjorie Taylor Green likes it or not,” he added, referring to the Georgia Republican legislator.
The tweet included a video in which Biden said he “just signed this veto because a law passed by Congress would jeopardize the retirement savings of people across the country. They couldn’t take into account investments that would be affected by the climate, that would be affected by overpayments to executives. And that’s why I decided to veto, it makes sense to veto.”
The Labor Department rule was created to eliminate the Trump-era requirement that workplace retirement plans must focus solely on financial gain. So-called ESG factors — short for environmental, social, and governance — have become more popular in the financial arena.
Because Democrats controlled both the House and Senate during his first two years in office, Biden has so far been spared the need to exercise his veto power. The move heralds new clashes with the Republicans, who took control of the House of Representatives in January.
The measure blocking the rule was passed in the Senate earlier this month 50-46, with two Democrats — Joe Manchin of West Virginia and John Tester of Montana — joining the Republicans. Three Democratic senators did not participate in the vote, resulting in a rare defeat for Democrats, who have the ability to prevent Republican-led bills from passing with a 51-49 majority in the House.
The Republican-led House of Representatives voted 216–204 to approve its version, and the vote count in both houses shows that Congress is two-thirds short of the votes needed to override Biden’s veto.
However, the passage marked the victory of the Republicans in their crusade against “awakened” capitalism: they attack ESG as an attempt to inject climate change policies into American financial planning.
Republicans have only stepped up their attacks on ESG investments since the collapse of Silicon Valley Bank this month, saying politically motivated investment decisions were partly responsible for the banking crisis.
“They have been one of the most active banks in their pursuit of ESG policy and investment,” Representative James Comer, chairman of the House Oversight Committee, told Fox News.
Florida Gov. Ron DeSantis and Virginia Gov. Glenn Youngkin — two potential 2024 Republican presidential candidates — are among the top critics of ESG-based investing.
Former presidents George W. Bush and Barack Obama used their veto handle a dozen times each in their two terms in office, and Donald Trump vetoed 10 congressional bills, according to government data.
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