On Thursday, members of the House failed to override President Biden's veto, which overturned their resolution to cancel a Labor Department rule in favor of the “environmental, social, and governance” (ESG) movement, an umbrella term for social justice advocacy in institutions.
In November, the Labor Department issued a final rule allowing retirement fiduciaries to consider climate change and other ESG factors when making investment decisions and exercising shareholder rights.
Earlier this month, Republicans and a few Democrats in the House and Senate voted to overturn the rule, but Biden vetoed their resolution on Monday. To override the veto, supermajorities were required in both chambers; however, the House fell short with a vote of 219-200.
Rep. Virginia Foxx (R-NC) criticized Biden's veto for undermining the financial security of American workers and retirees. The final Labor Department rule reversed a previous rule established under former President Donald Trump, which prevented fiduciaries from selecting investments based on non-financial considerations.
“Republicans will stand with American workers and retirees in protecting their savings,” Foxx said in a statement ahead of the vote. “ESG investing puts the future of millions of Americans in jeopardy when they are already facing economic hardships and inflation brought on by this administration’s reckless spending.”
ESG movement skeptics argue that the investment philosophy blends political and social causes, compromising profitability.
Earlier this month, the House voted 216-204 in favor of the resolution to eliminate the Biden administration rule, while the Senate approved the resolution 50-46. Sen. Jon Tester (D-MT) and Sen. Joe Manchin (D-WV), who face re-election campaigns next year in conservative states, voted to advance the measure.
Republicans viewed the resolution as a rebuke of the White House's recent support for the ESG movement. Biden, however, argued that the Republican-led resolution would force retirement managers to ignore risk factors such as climate change, undermine free market principles, and harm household retirement savings.