President Biden is threatening to use the first veto of his term to block a bill targeting a rule on retirement investing that passed through Congress this week, Axios reported.
The measure would overturn a Labor Department rule that allows retirement fund managers to take “environmental, social and governance,” or ESG, factors into account when picking investments.
It matters because two Democratic Senators facing re-election in 2024 went against their own party and joined Republicans to pass the bill. So too did one House Republican.
Sen. Jon Tester (Mont) and Joe Manchin (W. Va) joined to pass it in the Senate, and Rep. Jared Golden (Maine) joined in the House.
ESG criteria have become a political touchpoint. Republicans are criticizing them as evidence of “woke” business practices.
The outcome highlighted Republicans’ willingness to oppose their traditional allies in Wall Street and corporate America that adopt what party lawmakers characterize as “woke”, liberal practices.
Republicans claim the rule, which covers plans that collectively invest $12 trillion on behalf of 150 million Americans, would politicize investing by allowing plan managers to pursue liberal causes, which they say would hurt performance.
Biden, who has signaled that he intends to veto the measure, said the government “would be interfering with the market” if the rule is revoked.
Republicans expected Biden’s veto but went forward with the resolution believing that courts could potentially use it to establish that Congress never intended the Labor Department to make such a rule.
Republicans said their resolution would prevent fund managers from basing investment decisions on ESG factors primarily. But they acknowledged that it would not stop funds from considering ESG issues altogether.
Republicans used a tool called the Congressional Review Act that allows them to bypass the customary 60-vote Senate threshold to challenge the Labor Department rule.
They are expected to mount similar efforts on other issues in the coming months as the 2024 presidential campaign gets into full swing.