US House Republicans target ESG investments in latest culture war salvo
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[February 28, 2023]
By David Morgan
WASHINGTON (Reuters) - The Republican-controlled U.S. House is expected
to vote on Tuesday on a bill 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.
Republicans believe they could have enough support to fast-track a
companion bill and pass it in the Senate. That would force Biden, a
Democrat, to decide whether to sign or veto the joint resolution that
would prevent the Labor Department from enforcing a new ESG regulation.
"This will be President Biden's first veto," predicted a spokesperson
for Republican Senator Mike Braun, who has rallied support for the
Senate measure from the chamber's 49 Republicans and Democratic Senator
Joe Manchin.
The measure is the latest salvo in the Republican culture war against
the use of issues that promote environmental interests, social equality
and corporate responsibility in business and investment decisions.
The battle is only 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 Labor Department 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 they make retirement investments and
exercise shareholder rights, such as proxy voting.
It also requires plans to pursue traditional financial considerations.
The Republican joint resolution stipulates that the rule "shall have no
force or effect."
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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
"Retirement plans should be solely focused on delivering maximum
returns, not advancing a political agenda," said Republican
Representative Andy Barr, who introduced the House resolution. "If
Congress doesn't block the Department of Labor's rule greenlighting
ESG investing in retirement plans, retirees will suffer diminished
returns on the investment of their hard-earned money."
The measure is widely expected to pass the House, where Republicans
hold a slim 222-212 seat majority.
Democrats control the Senate 51-49. But Democratic Senator Doug
Fetterman is out for health reasons. It was not clear whether other
Democrats would be absent. Two Democratic absences could give
Republicans the simple majority necessary 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 that requires the
support of 60 senators to pass most legislation.
The White House on Monday said that Biden would veto the bill.
"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.
(Reporting by David Morgan; Editing by Alistair Bell)
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