WASHINGTON (Reuters) – The Republican-controlled U.S. House of Representatives is expected to vote on Tuesday on a bill that would bar President Joe Biden’s administration from allowing pension plans to consider environmental, social and corporate governance (ESG) issues in investment decisions.
Republicans believe they could muster enough support to fast-track a related bill and pass it in the Senate. That would force Biden, a Democrat, to decide whether to sign or veto a joint resolution that would prevent the Labor Department from enforcing the new ESG regulation.
“This will be President Biden’s first veto,” predicted a spokesman for Republican Sen. Mike Brown, who won support for the Senate measure from 49 House Republicans and Sen. Joe Manchin, a Democrat.
The measure is the latest salvo in the Republican culture war against the use of issues that promote the interests of the environment, social equity and corporate responsibility in business and investment decisions.
With the start of the 2024 presidential campaign, the struggle will only intensify. Florida Gov. Ron DeSantis, considered by many to be a leading contender for the White House, has already made his own fight against “woke” business 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 follow traditional financial considerations.
The joint Republican resolution says the rule is “of no force or effect.”
“Pension plans should be focused solely on maximizing returns, not on advancing a political agenda,” said Rep. Andy Barr, a Republican who introduced the House resolution. “If Congress doesn’t block a Labor Department rule that gives the green light to ESG investing in retirement plans, retirees will suffer reduced returns on investing their hard-earned money.”
The measure is expected to pass the House of Representatives, where Republicans hold a slim 222-212 majority.
Democrats control the Senate 51-49. But Democratic Sen. Doug Fetterman dropped out due to health issues. It was not clear whether other Democrats would be absent. The two Democratic absences could give Republicans the simple majority needed to pass the measure and send it to Biden’s desk.
Brown is introducing the resolution under the Congressional Review Act, which bypasses the Senate’s “filibuster” rule, which requires the support of 60 senators for most legislation to pass.
The White House said Monday that Biden would veto the bill.
“The rule reflects what successful investors in the market already know – there is ample evidence that environmental, social and governance factors can have a significant impact on certain markets, industries and companies,” the statement said.
Last week, 25 Republican-led states asked a federal judge in Texas to block the same rule, warning that the rule could cause millions of Americans to lose their retirement investments and hurt public finances. The plaintiffs in the case are the oil production company and the oil and gas trade.
(Reporting by David Morgan; Editing by Alistair Bell)