House Republicans came up short in their effort to override the first veto of President Joe Biden’s presidency, meaning Labor Department regulations permitting consideration of environmental, social and governance factors in investing will stand.
The vote, 219-200, on the veto override came after a brief debate, with it being a foregone conclusion that there would not be the required two-thirds majority to send the effort to the Senate.
“Thanks to Democrats, workers can be placed into ESG investment vehicles by default, and if a fiduciary finds that two investments are equal, the fiduciary is allowed to use collateral ESG factors to break the tie, without justifying or documenting that decision,” Education and the Workforce Chairwoman Virginia Foxx, a North Carolina Republican, said during the floor debate on the veto message.
The Labor Department regulation, finalized last year, overturned a Trump administration policy that made changes to how the 1974 law Employee Retirement Income Security Act is implemented. Rep. Andy Barr, R-Ky., introduced the measure to block the action, using a disapproval resolution under the Congressional Review Act.
In his veto message released Monday, the president argued that blocking the rule through the Congressional Review Act would prevent managers from considering an assortment of factors that may be relevant to investors.
“There is extensive evidence showing that environmental, social, and governance factors can have a material impact on markets, industries, and businesses. 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,” Biden said.
“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.”
Mary Ellen McIntire contributed to this report.