Topline
House Republicans on Thursday fell well short of the votes needed to override President Joe Biden’s rejection of a bill prohibiting retirement fund managers from basing investment decisions on so-called woke factors like the impacts of climate change—the first veto of his presidency.
President Joe Biden speaks during the awards ceremony for the National Humanities Medals and the … [+]
Key Facts
The 219-200 override vote won majority support from the Republican-controlled chamber, but fell well short of the two-thirds threshold required for an override (two-thirds of the Senate would have also needed to support overriding the veto to force the bill into law).
Biden carried out the veto Monday, claiming the bill “put at risk the retirement savings of individuals across the country.”
Republicans argue letting retirement fund managers take environmental, social and governance (ESG) factors into consideration politicizes investments by funneling money toward liberal causes.
Crucial Quote
“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,” House Speaker Kevin McCarthy (R-Calif.) said in a statement this week.
Key Background
Investments taking ESG factors into consideration have gained popularity in recent years, with some estimates suggesting global ESG investments could nearly double by 2026. Supporters argue ESG investments actually do prioritize long-term financial health, since owning securities that could be hurt by climate change might be less profitable in the future. The Trump Administration wrote new rules discouraging retirement fund managers from using ESG factors, but Biden relaxed those regulations in November. A new Labor Department provision went into effect on January 30 specifically noting ESG factors could be relevant to investment returns. Republican Rep. Andy Barr (Ky.) introduced legislation last month to strike the Labor Department rule, warning “retirees will suffer diminished returns on the investment of their hard-earned money.” The House passed the bill on February 28—largely along party lines—in a 216-204 vote, while the Senate approved the legislation a day later in a 50-46 vote. Centrist Democrats Joe Manchin (W.Va.) and Jon Tester (Mont.) joined the GOP in supporting the bill.
What To Watch For
Numerous Republican-led states are moving to ban ESG on their own, including Texas, Florida and Georgia.
Further Reading
What Is ESG Investing—And Why Republicans Are Trying To Ban It From Retirement Funds (Forbes)
Biden’s First Veto: How We Got Here In The ESG Debate (Forbes)
Biden uses first veto to defend rule on ESG investing (Reuters)
Source: https://www.forbes.com/sites/nicholasreimann/2023/03/23/republicans-fail-to-override-bidens-first-veto/