The US Senate passed a measure to block the US Labor Department from enforcing its new ESG retirement investing rule, guaranteeing a showdown with the White House on a resolution the Biden administration has pledged to veto.
Republicans in the Senate passed the resolution (H.J. Res 30) by a 50-46 vote Wednesday with the help of Democratic Sens.
After a mostly party-line vote in the House Tuesday, the resolution is set to force President
The rule permits private-sector workplace retirement plans to consider ESG factors when selecting and monitoring investments on behalf of participants and beneficiaries. It’s ignited a firestorm of controversy from Republicans who characterize it as an attempt to push “woke” climate change politics on the majority of US workers who save for retirement through their employers.
The resolution sponsored by Sen.
“When you are allowed to start allocating these retirement funds into certain investment vehicles that are pushing a political agenda that is government on overdrive,” Braun said in a press conference before the vote.
For weeks moderate senators up for reelection in 2024 had been indecisive about how they would vote on Braun’s resolution. While Manchin has supported the measure since its introduction, Tester only revealed his support hours before the vote.
Democratic absences from Sens. John Fetterman (Pa.),
Let money managers “take it into account and market that to their clients, and let others not do it and market that to their clients” he said. “But the notion that we would forbid them from taking these factors into account, I can’t see.”
Regulators from the DOL say the rule strikes a “neutral tone” on green investments while undoing Trump-era policies that scared investors away from financially material options.
But Braun said ESG investments should only be part of retirement accounts if they happen to provide high return rates. Fiduciaries shouldn’t follow a particular agenda but rather maximize returns, he said.
The earnings in retirement accounts are the “accumulation of a lot of hard work and the only criterion should be what gives you the best math, the best return on investment,” Braun said.
Since the department began enforcing the new policy in January, 25 Republican attorneys general, energy companies, plan sponsors, and plan participants have sued the agency in Texas and Wisconsin alleging it violates federal benefits law and administrative procedure.
Employers already wary of investment options that could expose them to renewed scrutiny from the plaintiffs bar have continued to avoid ESG factors amid the regulatory ping-pong.
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