President Joe Biden's Labor Department imposed a rule that allowed for, if not strongly encouraged, investment and retirement plan firms to fully consider what is known as "ESG" factors -- environment, social, and governance -- above and beyond the typical consideration of profitability and return on investment when making investment decisions for clients.
The rule change was denounced as part of the left's "woke" agenda by House Republicans, and they succeeded on Feb. 28 in passing a resolution to reject the Biden administration's new rule, Fox News reported.
The measure was passed by a vote of 216-204, which included one House Democrat siding with the GOP, and was then subsequently passed with a bipartisan vote in the Senate, only for President Biden to then veto the resolution.
Fox News reported that the Labor Department's ESG rule allowed and encouraged firms to consider such things as climate change and social justice, but was denounced by Republicans as just another effort to pressure -- or eventually even force -- corporations and investment firms to adopt and fully implement the leftist political agenda at the expense of profitability for their clients and customers.
Critics of the rule pointed out that evidence shows that companies that have embraced ESG tended to have higher rates and underperformed the market in comparison to companies that haven't fallen in line with the progressive agenda.
The resolution was written and passed in accordance with the Congressional Review Act, which allows Congress to override and reject rule changes from the executive branch within a certain time period if majorities of both the House and Senate agree to disapprove said rule change.
The Hill reported on March 1 that the Senate, just one day after receiving the bill from the House, voted 50-46 to pass the measure that would block the Labor Department's ESG rule from being further implemented or enforced.
Joining the Republicans in their opposition to the rule were Sens. Joe Manchin (D-WV) and Jon Tester (D-MT) -- both of whom are relatively moderate in comparison to their Democratic colleagues in the Senate and who both face vulnerable re-election bids in 2024 in their respective red-leaning states.
The White House, of course, defended the rule change and revealed President Biden's intent to protect the ESG rule by, for the first time since taking office, exercising his veto power to kill the resolution.
According to Roll Call, President Biden finally did exactly that on Monday, nearly three weeks after the measure was passed with bipartisan votes in the House and Senate.
In a special message from the White House to announce the veto, the president again defended the Labor Department's ESG rule for fiduciaries and mischaracterized the Republican opposition and what the resolution would do if signed into law.
"There is extensive evidence showing that environmental, social, and governance factors can have a material impact on markets, industries, and businesses," Biden said. "But the Republican-led resolution 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 resolution would prevent retirement plan fiduciaries from taking into account factors, such as the physical risks of climate change and poor corporate governance, that could affect investment returns."
"Retirement plan fiduciaries should be able to consider any factor that maximizes financial returns for retirees across the country. That is not controversial -- that is common sense," he added. "Therefore, I am vetoing this resolution."
Roll Call noted that House Republicans will likely begin the process of attempting to override Biden's veto with a two-thirds majority, or 290 members, and be followed suit by 67 members of the Senate, but given how slim the margins were in the initial passage and the generally widespread support among most Democratic members for ESG, an override, unfortunately, seems rather unlikely.