President Biden issued the first veto of his presidency on Monday, rejecting a bill that would have nixed a Department of Labor rule that gives room for retirement plan managers to consider environmental, social and governance (ESG) factors in their investment decisions.
“There is extensive evidence showing that environmental, social, and governance factors can have a material impact on markets, industries, and businesses,” Mr. Biden said in a statement announcing the veto. “But the Republican-led bill would force retirement managers to ignore these relevant risk factors, disregarding the principles of free markets and jeopardizing the life savings of working families and retirees. In fact, this bill would prevent plan fiduciaries from taking into account factors like the physical risks of climate change and poor corporate governance, that could affect investment returns.”
Republicans have heavily criticized the rule and say ESG investing practices that take into account issues like climate change unfairly penalize industries like the oil and gas sectors.
The president said retirement fund managers “should be able to consider any factor that maximizes financial returns for retirees across the country.”
The resolution was introduced in the GOP-led House by Republican Rep. Andy Barr and passed in late February, with one Democrat joining Republicans in supporting it. The Senate soon voted 50 to 46 to overturn the rule, with Democratic Sens. Joe Manchin and Jon Tester joining Republicans in support.
Mr. Biden has yet to say whether he will sign a measure that would declassify information related to the origins of the COVID-19 pandemic. The House and Senate both passed that measure unanimously.
House GOP leaders intend to hold a vote on overriding the president’s veto, which would require the support of two thirds of both chambers.
“President Biden’s first veto is against a bipartisan bill that protects retirement savings from political interference,” House Speaker Kevin McCarthy said in a statement. “It is clear that President Biden wants Wall Street to use your hard-earned money not to grow your savings, but to fund a far-left political agenda. That will hurt seniors and workers, especially after President Biden’s reckless spending caused record inflation and rapid interest rate hikes.”