Yesterday, President Joe Biden issued the first veto of his presidency on a resolution to overturn a retirement investment rule that allows managers of retirement funds to consider the impact of climate change and other environmental, social and governance (ESG) factors when picking investments.
ESG investments take into account social and environmental impacts: Investment choices are based on considerations like companies’ carbon emissions and executive pay, in addition to potential returns.
Opposing ESG investing has become a cultural marker for Republicans, who led the push to pass the resolution through Congress. GOP lawmakers want investment fund managers to focus exclusively on growing clients’ retirement savings by maximizing returns, rather than advancing what they see as “woke” goals.
Democrats say it’s not about ideology and will help investors. They argue that the dichotomy between social goals and investment returns is often false since the former can influence a company’s economic prospects over the long haul.
The resolutions, which would have rescind a Department of Labor rule, passed both chambers of Congress before making it to the desk of the President.
“I just signed this veto because legislation passed by the Congress would put at risk the retirement savings of individuals across the country. They couldn’t take into consideration investments that wouldn’t be impacted by climate, impacted by overpaying executives, and that’s why I decided to veto it – it makes sense to veto it,” Biden said in a video posted to social media Monday afternoon.
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