Biden’s First Veto Will Be Over ‘Woke Capitalism,’ or ESG

Joe Biden is preparing to enact the first veto of his presidency.

Joe Biden is preparing to enact the first veto of his presidency.
picture: Evan Fauci (AP)

President Joe Biden is expected to issue the first veto of his term to defend the right of pension plan managers to direct clients’ investments based on environmental and social considerations. The expected action follows the introduction of a Republican-backed resolution through the House and Senate this week targeting the so-called “awakened capitalism”, or Environmental Social Management (often abbreviated as ESG).

ESG is nothing more than that It is a set of criteria that investors and companies can use to make more socially and environmentally conscious business and financial decisions. This practice certainly will not, and may not, solve the climate crisis on its own Even causing so much damage to the company’s net profit. But for a certain political sector, the concept is an affront to capitalism – even though it is an expression of the free market.

What is GOP beef with ESG?

Over the past few years, conservatives have added ESG to their ever-growing laundry list of “culture war” complaints. Last month, the investor Vivek Ramaswamy has launched his 2024 presidential campaign Almost entirely on a platform that goes against investor choice through social values. Scott Adams Delbert Caricature man and racist remarkRecently declared war sustainable investment.

But it’s not just about the cultural arena — the GOP has also turned its crusade against ESG into real politics. Texas was the first state to pass a law in 2021 that bars the state from doing business with companies that “boycott” fossil fuels. at the end of last yearMore than 15 countries have passed or proposed similar legislation. Perhaps as a result of this pressure, some major companies are beginning to signal that they are trying to get out of their climate commitments.

Which brings us back to the Biden administration and this particular battle.

What was happening to the ESG policy?

At the end of 2022, the Ministry of Labor issued a rule, which went into effect January 30, allowing managers of retirement plans to make decisions based on environmental, weather or social factors. For example, if a client is interested in an account that avoids investing in the fossil fuel industry, the investment manager can make that option possible. The law does not require that they offer ESG plans nor that account holders choose them.

The Labor Department rule was in response to (and reversal of) a 2020 Trump-era policy that effectively barred retirement investment portfolios from being based on anything other than what plan managers believed would bring the highest returns to their clients. (By the way, there is an argument that ESG goes along with long-term financial benefit – especially provided The current state of our planet need to Get away quickly from fossil fuels.)

On Wednesday, the Republican senators — joined by West Virginia Democrat Joe Manchin and Montana Democrat John Tester —They voted 50-46 to pass Joint decision new heart a base. This same joint resolution had previously been passed in the House of Representatives on Monday by a vote of 216 to 204. From their decision to side with the Republicans, Manchin and Tester alleged that providing voluntary ESG options to investors undermined retirement savings for both peoples.

However, the biggest opposition to environmentally conscious investing is probably the fossil fuel industry itself. Multiple state bills aim to ban “boycotts” of fossil fuel investment They are directly linked to lobbyists and financiers in the industry Through the American Legislative Exchange Board and the Koch Brothers. in Nope, Montana And West VirginiaFossil fuels are big business. Tester and Manchin’s attitude will probably be more about defending their state and Personal bets in oil, gas and coal from their constituents’ retirement funds.

How will Biden respond to the anti-ESG resolution?

Regardless of the exact reason why the Senate voted, the Biden administration he have I vowed to take action. like The anti-ESG resolution was coming to a vote in Congress, the White House issued a statement to express that it Strong opposition to the abolition of the Ministry of Labor ruling.

“If the Department of Labor returns to the 2020 rule, the federal government will intervene in the market in a way that will stand in the way of the ability of retirement plan agents to protect their hard-earned retirement savings and pensions and unnecessarily limit the options available to pension plan participants and investors.”. “If the President had been presented with HJ Res. 30, he would have vetoed it.”

The decision is now I headed to Biden’s desk, and the president is expected to deliver on his veto promise.


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