Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

U.S. House votes to block ESG investment rule in latest culture war salvo

Published Feb 28, 2023 06:12AM ET Updated Mar 01, 2023 07:36AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: U.S. Senator Mike Braun (R-IN) speaks to reporters in the Senate subway on Capitol Hill in Washington, U.S., July 19, 2022. REUTERS/Elizabeth Frantz

By David Morgan

WASHINGTON (Reuters) -The Republican-controlled U.S. House voted on Tuesday to block President Joe Biden's administration from allowing retirement plans to consider environmental, social and corporate governance, or ESG, issues in their investment decisions.

The lawmakers voted 216-204 to adopt a joint resolution that would prevent the Labor Department from enforcing a rule that makes it easier for plan managers to consider ESG factors when they make investments and exercise shareholder rights, such as through proxy voting.

The action, the latest salvo in a Republican culture war against "woke" business practices, sends the measure onto the Senate, where Republicans hope to muster enough support to pass it as early as Wednesday.

If approved by both chambers, the resolution would go to Biden, a Democrat, who the White House said would veto it.

Republicans claim the Labor rule represents a Biden administration ploy to politicize investing by allowing plan managers to pursue liberal causes with the retirement savings of unwitting investors.

Representative Andy Barr, who introduced the House measure, warned that the Labor rule would ultimately saddle Americans with higher fees for less-diversified investments in lower-performing portfolios. "Twenty-one percent of investors don't even know what ESG stands for," Barr said.

The regulation, which took effect in January, covers plans that collectively invest $12 trillion on behalf of more than 150 million people.

Experts said the Biden administration has made only cosmetic changes to an earlier regulation adopted under former President Donald Trump. Where the Trump rule required plan managers to "prudently" determine whether a factor would have a "material" effect on investments, the Biden rule says they can "reasonably" determine "relevant" effects, according to an analysis published by Harvard Law School.

Both the Trump and Biden rules prohibit plan managers from subordinating the financial interests of beneficiaries to other objectives.

But the political battle over ESG issues is likely to intensify as the 2024 presidential campaign gets under way. Florida Governor Ron DeSantis, widely seen as a leading White House contender, has already made his own fight against "woke" businesses a hallmark of his image.

The House vote could be followed by action in the Senate, where Democrats have a 51-49 majority. Republicans have support from all 49 of their members and Democratic Senator Joe Manchin. But they could need an additional Democrat or one of the three independents who normally vote with the Democrats to pass the measure on a simple majority.

"I'll be proud to support this commonsense measure later this week," Senate Republican leader Mitch McConnell said in a floor speech.

Republican Senator Mike Braun is bringing the resolution under the Congressional Review Act, which bypasses the Senate's "filibuster" rule that requires the support of 60 senators to pass most legislation.

The White House on Monday said that Biden would veto the bill if it reached his desk.

    "The rule reflects what successful marketplace investors already know – there is an extensive body of evidence that environmental, social and governance factors can have material impacts on certain markets, industries and companies," it said in a statement.

Last week, 25 Republican-led states asked a federal judge in Texas to block the same rule, warning that the regulation could lead to millions of Americans losing retirement investments and harm state finances. Plaintiffs in the case include an oil drilling company and an oil and gas trade group.

U.S. House votes to block ESG investment rule in latest culture war salvo
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Maximus Maximus
Maximus Maximus Feb 28, 2023 4:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
the republicans are a waste of taxpayers' money..
Glenn Young
Glenn Young Feb 28, 2023 4:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
2 more years of Biden and we won't have any more to waste.
Glenn Young
Glenn Young Feb 28, 2023 4:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Are you kidding . The Dumbocrats and their woke policies are si ki g us all. If you have or have ever had a job , look at your 401k. If your the typical Dem. who doesn't work and lives off the system , that explains your opinion
jason xx
jason xx Feb 28, 2023 6:29AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Republicucks dont have anything better to do?
Glenn Young
Glenn Young Feb 28, 2023 6:29AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yeah, keep voting Dems in and watch your life saving dissappear.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email