>
BREAKING NEWS: House votes to block Biden’s ‘woke’ plan pushing retirement planners to invest in ESG in 401ks
- A disapproval resolution passed 216 to 204, with one Democrat voting with Republicans to block the rule.
- The resolution only requires a simple majority to pass and be sent to the president, but he can then veto it.
- The Department of Labor released the rule in November that allowed retirement managers to consider ESG factors.
The House voted Tuesday to strike down a Biden administration rule that allows private retirement funds to consider environmental, social and governance (ESG) factors in investment decisions.
A disapproval resolution passed 216 to 204, with one Democrat, Rep. Jared Golden of Maine, voting with Republicans to block the rule.
The resolution was introduced by Rep. Andy Barr, R-Kentucky, and Sen. Mike Braun, R-Ind., is introducing a similar bill in the Senate, with the approval of at least one Senate Democrat, Joe Manchin. .
The House voted Tuesday to strike down a Biden administration rule that encourages private retirement funds to consider environmental, social and governance (ESG) factors in investment decisions.
Under the Congressional Review Act, Braun and Barr could force a vote on their resolution to strike down the DOL rule. The resolution only requires a simple majority to pass and be sent to the president, but he can then veto it.
If the resolution makes it to President Biden’s desk, he would be expected to use his first veto of the presidency.
The Labor Department unveiled a rule in November that allowed retirement managers to consider ESG factors, replacing a rule that said managers focused on getting the best returns for the 152 million Americans who invest in the retirement plan. ERISA.
The Employee Retirement Income Security Act of 1974 defines a strict fiduciary responsibility to which nearly all pension plan professionals have long adhered.
ERISA covers most employer-sponsored retirement plans and manages $11.7 trillion in assets.
The White House has said the rule, which would reinstate a provision that Trump struck down in favor of directing money managers to focus strictly on returns, “is not a mandate.”
“No fiduciary is required to make investment decisions based solely on ESG factors,” the White House Office of Management and Budget said. “The rule simply ensures that retirement plan trustees must engage in a risk-return analysis of their investment decisions and acknowledges that these factors may be relevant to that analysis.”
Rep. Andy Barr, R-Ky., introduced the bill as Republicans make corporate ‘wokism’ their new battlefront
Democrats argue that the rule frees up retirement administrators to make investment decisions that may be less profitable in the short term but more profitable in the long term as clean energy and sustainability projects become more lucrative.
As of this writing, the S&P 500 ESG Index is down 9.5% over the past year, but is up 10.5% in 10 years. The S&P 500 Energy Index is up 24.1% in one year, but only 1.2% in 10 years.
Various ESG ratings firms are charged with assessing the good and the bad, and some critics say that without proper measurement, the practice can amount to a “marketing scheme.”
For example, Sustainalytics’ ESG risk score gives Vital Farms, a pasture-raised egg and butter company that preaches its commitment to “conscious capitalism” and “ethically produced food on family farms,” a worse score (42 .8) than four defense contractors: Northrup Grumman, Raytheon, Lockheed Martin and Boeing (28.4 to 35).