ESG Factors May Be Considered by Pension Fund Managers, Biden Asserts With First Veto
President Joe Biden used his veto power on Monday for the first time since becoming president to reject a bill passed by the majority-Republican Congress that would have reversed a Labor Department rule involving environmental, social and governance (ESG) considerations for investment fund managers.
The proposed legislation would have stopped pension fund managers from being able to base their investment decisions on factors like climate change and the “overpaying” of executives, Biden said in a video posted on Twitter.
“I just signed this veto because the legislation passed by the Congress would put at risk the retirement savings of individuals across the country,” Biden said in the video.
Congress passed the bill by a vote of 50 to 46 on March 1. The Republican majority included the votes of West Virginia’s Joe Manchin and Montana’s Jon Tester, both Democratic senators who face reelection next year in states that lean Republican.
“Despite a clear and bipartisan rejection of the rule from Congress, President Biden is choosing to put his administration’s progressive agenda above the well-being of the American people,” Manchin said in a statement, as Reuters reported.
Plans covered by the vetoed bill include $12 trillion in investments for 150 million Americans.
“It is clear that President Biden wants Wall Street to use your hard-earned money not to grow your savings, but to fund a far-left political agenda. That will hurt seniors and workers,” said Republican Speaker of the House of Representatives Kevin McCarthy in a statement, as reported by Reuters.
Biden and Democrats said that it was Republicans who were trying to prevent the consideration of factors that went against their agenda.
“This bill would risk your retirement savings by making it illegal to consider risk factors MAGA House Republicans don’t like. Your plan manager should be able to protect your hard-earned savings — whether Rep. Marjorie Taylor Greene likes it or not,” Biden said, as The Hill reported.
Proponents of the investment rule say taking ESG factors into consideration means people can have a positive impact while avoiding climate-related financial risks.
If Biden hadn’t vetoed the new measure, it would have effectively reinstated a Trump-era rule that blocked federal retirement plan managers from taking factors like social impacts, pending lawsuits and climate change into consideration for their investment decisions, reported The Associated Press.
“The President vetoed the bill because it jeopardizes the hard-earned life savings of cops, firefighters, teachers, and other workers – all in service of an extreme, MAGA Republican ideology,” said White House spokesperson Robyn Patterson in a statement, according to The Hill.
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