President Biden may be close to issuing the first veto of his presidency as Congress is expected to pass a resolution disapproving of a Department of Labor (DOL) rule allowing retirement plan managers to factor environment, social and governance (ESG) into their investment decisions.
Lawmakers have critcized the DOL rule, saying it ‘politicizes’ and ‘jeopardizes’ the retirement savings of more than 152 million Americans. Last month, Sen. Mike Braun, R-Ind., and Rep. Andy Barr, R-Ky., introduced the bipartisan disapproval resolution, which has the backing of all GOP senators, Democratic Sen. Joe Manchin of West Virginia and more than 100 organizations.
Passage will only require a simple majority Senate vote to pass and be sent to Biden’s desk. If Sen. John Fetterman, D-Pa., is still out of the office due to being treated for clinical depression, that would let supporters pass it by at least a 50-49 vote, or a larger margin if other Democrats support it.
A GOP aide told Fox News Digital the bill will be able to pass the House and is confident there are enough votes to pass it in the Senate, even if Fetterman votes against it.
‘After a month of President Biden accusing Republicans of partisanship and trying to hurt Americans’ retirements, the next thing that comes to his desk is a bipartisan rebuke of his policy that’s hurting Americans’ retirement savings to fund his political agenda,’ said the aide.
The House is expected to vote on Wednesday, when it is easily expected to be approved, given the GOP majority. The Senate vote is expected to follow later Wednesday or on Thursday.
The White House warned Monday that Biden ‘will veto’ the bill if it is sent to his desk.
‘The President will continue to deliver for America’s workers. If the President were presented with H.J. Res. 30, he would veto it,’ said the White House in a Statement of Administration Policy defending the use of ESG factors in fiduciary decisions.
‘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,’ the White House argued while slamming the previous Trump administration for ‘chilling’ ESG investments.
The resolution of disapproval was proposed under the Congressional Review Act. Under that law, resolutions can be forced onto the agenda for a floor vote even if Senate Democrats oppose it. That mechanism is what is expected to allow Senate passage after GOP leaders pass it in the House.
Once it passes, Biden will have a chance to veto it, and the ESG vote could be Biden’s first time to use his veto pen. If Biden does veto it, Congress would have to approve the resolution again in a two-thirds majority vote in both chambers, a much tougher hurdle.
ESG standards are increasingly used by investors and asset managers to guide their decision-making.
The environmental factors considered often include how a corporation contributes to pollution or climate change. Social criteria examines a company’s relationship with employees, ethics, engagement with nonprofits and stake in the community. Governance considers the corporation’s leadership, overall ethics and standards, and it includes the makeup of the board of directors and the recipients of their donations.