The U.S. Senate has voted to block a Department of Labor (DOL) rule that allows retirement managers to consider environmental, social, and governance (ESG) factors when determining where to invest funds.
The March 1 vote fell largely along party lines, with most Democrats voting against the joint resolution disapproving of the rule, and Republicans voting for it. However, Sens. Jon Tester (D-Mont.) and Joe Manchin (D-W.Va.) crossed party lines to sway the vote in Republicans’ favor, passing the resolution in a 50-46 vote.
The Wednesday vote follows the House’s passage of the resolution on Tuesday in a 216-204 vote.
In announcing the rule in November, the Department of Labor held that the Trump administration had “unnecessarily restrained” retirement plan managers’ ability to weigh ESG factors when making investments.
“The rule announced today will make workers’ retirement savings and pensions more resilient by removing needless barriers and ending the chilling effect created by the prior administration on considering environmental, social, and governance factors in investments,” Assistant Secretary for Employee Benefits Security Lisa M. Gomez said at the time. “Climate change and other environmental, social and governance factors can be useful for plan investors as they make decisions about how to best grow and protect the retirement savings of America’s workers.”
Opponents of the rule, however, have argued that it allows for the liberal politicization of Americans’ retirement investments, regardless of their personal preferences.
“Once again, Biden and his administration are putting their liberal priorities over the best interests of the American people by allowing ridiculous and illogical ESG policies into employer-sponsored retirement plans,” Sen. Rick Scott (R-Fla.) said, denouncing the rule in a Feb. 1 statement.
“This rule allows Wall Street fund managers to make choices on behalf of Americans based on their own beliefs and social agenda, not what’s financially sound,” Scott noted. “It jeopardizes the hard-earned nest egg millions of families rely on to retire comfortably. Families deserve better, and I’m glad to join my colleagues to fight this rule and reverse this horrible decision.”
However, Democrats in favor of the ESG rule have argued that opposing it runs contrary to Republicans’ free-market capitalist principles.
Senate Democratic leader Chuck Schumer accused Republicans of interfering with private investing decisions, saying on the Senate floor that they are “forcing their own views down the throats of every company and every investor.”
The bill will now head to President Joe Biden’s desk for signing, though the White House has said he would veto it.
Earlier on Wednesday, the White House denounced the Republicans’ attempt to overturn the ESG rule, branding it a “MAGA Republican” effort.
“Republicans talk about their love of free markets, small government, and letting the private sector do its work. The Republican bill is the opposite of that,” White House Press Secretary Karine Jean-Pierre said during a press briefing before the Senate vote.
“It forces MAGA Republicans’ ideology down the throats of private sector and handcuffing investors, as well,” she said.
The measure would prevent fund managers from taking into account major risks like “extreme climate threats and poor corporate governance,” she explained, adding that it would “jeopardize the retirement and life savings” of millions of Americans.
When The Epoch Times asked the press secretary about the White House’s reaction to growing congressional opposition to ESG investing, she did not elaborate.
“As it relates to the dynamics of the Senate and where this is going, I leave that to Senator Schumer. That’s something for him to speak to. What I can say is that if this bill reaches the President’s desk, he will veto it.”
Chris Iacovella, CEO of the American Securities Association, which represents America’s regional financial services firms, urged the president to sign the bill.
“The retirement savings of America’s working families must never take a back seat to the fee generation of Wall Street‘s ESG Industrial Complex. We are pleased the Senate is taking bipartisan action to roll-back this rule and we urge the President to accept the will of Congress and the American people,” Iacovella said in an email.
If Biden vetoes the measure, Congress would need to approve the bill again with a two-thirds majority vote in both chambers.
Reuters contributed to this report.