US House Republicans target ESG investments in latest culture war salvo
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By David Morgan
WASHINGTON (Reuters) – The Republican-controlled U.S. House of Representatives is expected to vote on Tuesday on a bill aimed at preventing President Joe Biden’s administration from allowing pension plans to incorporate environmental, social and governance (ESG) issues into their investment decisions to consider.
Republicans believe they may have enough support to rush a companion bill and pass it in the Senate. That would force Biden, a Democrat, to choose whether to sign or veto the joint resolution that would prevent the Labor Department from pushing through a new ESG regulation.
“This will be President Biden’s first veto,” predicted a spokesman for Republican Sen. Mike Braun, who has garnered support for the Senate measure from the 49 Republicans in the chamber and Democratic Sen. Joe Manchin.
The move is 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 only 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. “Unless Congress blocks the Labor Department’s requirement to authorize ESG investments in retirement plans, retirees will see reduced returns on investing their hard-earned money.”
The measure is widely expected to pass the House of Representatives, where Republicans hold a slim majority of 222-212 seats.
Democrats control the Senate 51-49. But Democratic Senator Doug Fetterman is out due to health issues. It was unclear whether other Democrats would be missing. Two Democratic absences could give Republicans the simple majority needed to pass the measure and send it to Biden’s desk.
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 Biden would veto the bill.
“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 Alistair Bell)