U.S. House Republicans target ESG investments in latest culture war salvo

WASHINGTON, Feb 28 (Reuters) – The Republican-controlled U.S. House of Representatives on Tuesday will vote on a bill aimed at preventing President Joe Biden’s administration from allowing pension plans to address environmental, social and governance (ESG) issues to consider in their investment decisions.

Republicans expect to pass the measure in a late-afternoon vote in the House of Representatives and may have enough Senate support to refer it to Biden, a Democrat the White House has said would veto the bill , which would prevent his own Department of Labor from enforcing a new ESG rule.

Republican Senate leader Mitch McConnell said the bill would ensure plan managers consider only financial returns when making investments and not “foreign factors” like pollution and employment policies.

“I will be proud to support this common sense action later this week,” McConnell said in a speech.

It’s the latest salvo in the Republican culture war against the use of themes that promote environmental interests, social equality and corporate responsibility in business and investment decisions.

The fight is likely to intensify when the 2024 presidential campaign begins. Florida Gov. Ron DeSantis, widely regarded as the leading contender for the White House, has already made his own fight against “woke” corporations a hallmark of his image.

The Labor Department’s rule, which covers plans that collectively invest $12 trillion on behalf of more than 150 million people, makes it easier for plan managers to consider climate change and other environmental, social and governance factors when making retirement investments and exercise shareholder rights. like proxy voting.

It also requires plans to follow traditional financial considerations.

The Republican joint resolution states that the rule “has no force or effect.”

“Retirement plans should be focused solely on maximizing returns and not pushing a political agenda,” said Republican Representative Andy Barr, who introduced the House resolution.

The measure is widely expected to pass the House of Representatives, where Republicans hold a slim majority of 222-212 seats.

A vote in the Senate could follow as early as Wednesday, where the Democrats have a 51:49 majority. The Republicans are supported by all 49 of their members and Democratic Sen. Joe Manchin. But they may need an additional Democrat or one of the three independents who normally vote with Democrats to pass the measure with a simple majority.

“I think there’s going to be two or three votes that don’t reveal themselves until you speak,” said Republican Sen. Mike Braun, who introduced the Senate measure.

Braun is bringing the resolution under the Congressional Review Act, which bypasses the Senate’s “filibuster” rule, which requires the support of 60 senators to pass most legislation.

The White House said Monday that Biden would veto the bill when it reaches his desk.

“The rule reflects what successful marketplace investors already know — there is ample evidence that environmental, social and governance factors can have material impacts on specific markets, industries and companies,” the statement said.

Last week, 25 Republican-run states asked a federal judge in Texas to block the same rule, warning that the regulation could result in millions of Americans losing their retirement savings and damaging state finances. Plaintiffs in the case include an oil drilling company and an oil and gas trading group.

Reporting by David Morgan Editing by Scott Malone and Alistair Bell

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