Biden Issues First Veto of Presidency, Blocks Anti-ESG Resolution Passed by Congress
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President Biden issued the first veto of his presidency on Monday, blocking a resolution passed by Congress that would have prohibited retirement-plan fiduciaries from considering environmental, social, and governance (ESG) factors in making their investment decisions.
“I just signed this veto because the legislation passed by the Congress would put at risk retirement savings of individuals across the country,” Biden said in a video published on Twitter. “They couldn’t take into consideration investments that would be impacted by climate impacted by overpaying executives.”
I just vetoed my first bill.
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. pic.twitter.com/PxuoJBdEee
— President Biden (@POTUS) March 20, 2023
In early March, both chambers voted to pass a resolution blocking a Labor Department rule that makes it easier for investors to take into account climate change and other social factors, rather than focusing solely on returns for retirees. Two Senate Democrats, including Jon Tester and Joe Manchin, voted alongside Republicans to advance the measure on March 1.
Following the veto, Manchin blasted Biden in a comment to CNN: “This Administration continues to prioritize their radical policy agenda over the economic, energy and national security needs of our country, and it is absolutely infuriating.”
Republicans characterized the rule as a “woke” innovation of the Biden administration that will financially harm Americans. Some ESG proposals restrict holding equity in certain lucrative industries, such as energy, and could therefore cause diminished portfolio performance.
Kentucky representative Andy Barr introduced the measure via the Congressional Review Act, which is an an oversight mechanism Congress can use to overturn final rules issued by federal agencies. Barr argued Biden’s plan would “politicize Americans’ retirement accounts and jeopardize their retirement security” by saddling them with higher fees for less-diversified investments.
The White House has maintained, however, that the rule could actually enhance the value of Americans’ portfolios and that it’s important to adjust for ESG in certain business and investment moves.
“The rule reflects what successful marketplace investors already know – there is an extensive body of evidence that environmental, social, and governance factors can have material impacts on certain markets, industries, and companies,” the White House said in a statement after the Senate blocked the bill in March.
A two-thirds majority of Congress would be needed to override Biden’s veto.
