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The U.S. House, controlled by Republicans, is expected to vote on a bill on Tuesday that would void a recent Biden Administration rule to approve ESG investing in retirement plans.
Last November, the U.S. Department of Labor announced a final rule that allows plan fiduciaries to consider climate change and other environmental, social, and governance factors when they select retirement investments and exercise shareholder rights, such as proxy voting.
“Today’s rule clarifies that retirement plan fiduciaries can take into account the potential financial benefits of investing in companies committed to positive environmental, social and governance actions as they help plan participants make the most of their retirement benefits,” Secretary of Labor Marty Walsh said at the time.
Republicans in Congress, however, are determined to have the rule nullified under a Congressional Review Act (CRA) measure, and they believe they could pass a companion bill in the Senate, narrowly controlled by Democrats.
If the bill passes, it could be the first veto of President Joe Biden, a spokesperson for Republican Senator Mike Braun told Reuters.
Senator Braun has said that the Biden Administration’s rule on ESG considerations in investing “plays politics with Americans’ retirement savings.”
The ESG rule would allow “fiduciaries to select a fund with a lower rate of return if it supports a progressive political agenda,” Senator Braun told The Daily Signal in an emailed statement.
Republican Representative Andy Barr, who formally reintroduced the CRA measure early this month, said that “Retirement plans should be solely focused on delivering maximum returns, not advancing a political agenda.”
“If Congress doesn’t block the Department of Labor’s rule greenlighting ESG investing in retirement plans, retirees will suffer diminished returns on the investment of their hard-earned money.”
The measure is expected to pass the House, and it could even pass the Senate, which is 51-49 controlled by Democrats, but with Senator John Fetterman out for health reasons, two absences from the Democrats would give Republicans a simple majority to pass the measure, Reuters notes.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.