U.S. President Joe Biden is
expected to issue his first veto after two Democrats—Sens. Joe Manchin of West Virginia and Jon Tester of Montana—partnered with the GOP on Wednesday to pass legislation that would block his administration's rule allowing retirement plan managers to consider climate and other factors in investment decisions.
50-46 Senate vote came a day after a 216-204 House vote in which Rep. Jared Golden (D-Maine) joined with Republicans to advance the resolution about the U.S. Department of Labor (DOL) rule on environmental, social, and governance (ESG) factors—which is notably opposed by fossil fuel companies.
"The DOL rule simply restores the longtime status quo of allowing retirement plans to consider important financial factors like how a company is run, whether its practices match its values, and the risks it faces from global disruptions like climate change,"
said Rachel Curley, democracy advocate with the group Public Citizen, in a statement Wednesday.
"Repealing a rule protecting retirement savings for millions of workers is irresponsible and puts personal political ambitions above long-term financial responsibility," Curley continued. "Leaving investors in the dark is a disservice to our entire economy. Anyone claiming to care about workers voting to overturn such a reasonable rule is clearly playing politics with workers' retirement savings in a way that flies in the face of common sense."
Public Citizen is among dozens of groups—including Americans for Financial Reform, Environmental Defense Fund (EDF), League of Conservation Voters, and Interfaith Center on Corporate Responsibility—that have warned against blocking the rule this week.
"It's wrong that some lawmakers would play politics with Americans' financial futures by preventing retirement fund managers from considering all risks—including financial risks related to climate—when making investment decisions," declared EDF senior vice president for political affairs Elizabeth Gore. "The standards they're trying to undermine help fund managers make the best possible decisions when investing our money."
In a policy statement on Monday, the Biden administration stressed that the DOL rule "is not a mandate—it does not require any fiduciary to make investment decisions based solely on ESG factors. The rule simply makes sure that retirement plan fiduciaries must engage in a risk and return analysis of their investment decisions and recognizes that these factors can be relevant to that analysis."
"The president will continue to deliver for America's workers," the statement pledged, concluding that if the resolution reached his desk, "he would veto it."
As Politicoreported Wednesday:
Biden's threat in a way gives moderate Democrats a free pass to distance themselves from the president because they don't face the risk of the rollback actually being implemented.
Asked whether Democratic leadership had pressured him to vote "no," Tester told reporters that they gave a presentation to the broader caucus Tuesday. But "it wasn't like, pestering."
Manchin took to the Senate floor to blast the Biden DOL rule as "just another example of how our administration prioritizes a liberal policy agenda over protecting and growing the retirement accounts of 150 million Americans."
During a floor speech Wednesday, Senate Majority Leader Chuck Schumer (D-N.Y.) took aim at the GOP, saying in part that "for a long time, my Republican friends prided themselves—prided themselves!—for being the party of free markets. The party of small government. The party opposed to injecting political ideology into the decisions of private investors and managers and companies."
"But apparently, all that was talk. Because today, our Republican friends are making an effort to limit free market choice and inject hard-right ideology into private sector decision-making," he continued. "Now, the hard-right has made a lot of noise trying to make ESG their dirty little acronym. They say this is about wokeness, that this is a cult, that it's some grave intrusion into finance. It's the same predictable, uncreative, unproductive attacks they use for anything they don't like."
Wednesday that "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."
Even if Biden vetoes the resolution, his DOL rule still faces another hurdle, as CNN analyst and University of Texas School of Law professor Steve Vladeck pointed out on Twitter.
"The Biden ESG rule is also currently the subject of a legal challenge filed by Texas and a group of other red states in federal district court in Amarillo, where—stop me if you've heard this before—it had a 100% chance of being assigned to Judge [Matthew] Kacsmaryk," Vladeck said, referring to a right-wing judge who is expected to soon rule on a crucial abortion medication case.