President Biden issued his first veto on Monday, quashing a bipartisan bill to bar pension fund managers from considering environmental, social, and corporate governance (ESG) factors when making investments. The vetoed legislation had sought to overturn a rule allowing retirement fiduciaries to factor in climate change, social justice, and other ESG elements when investing retirees’ funds.
Biden’s veto faced criticism from Republicans and Democrats. GOP lawmakers called the rule an example of “woke capitalism”. They argued that fund managers should prioritize investment returns rather than politically-driven factors.
The bill allows plan managers to put left wing politics ahead of meeting their fiduciary obligations to their investors. Biden is lying about this bill — again. https://t.co/7MfmJsvqHp
— Ken Gardner (@KenGardner11) March 21, 2023
Among the Democratic critics is Sen. Joe Manchin (D-W.Va.), who voted for the bill and accused the administration of exacerbating economic challenges by prioritizing a “radical social and environmental agenda.”
Most Democrats, on the other hand, argue that considering ESG factors can maximize financial returns for retirees. Unfortunately, despite the bill’s bipartisan nature, Biden’s veto focused on “MAGA House Republicans,” singling out Rep. Marjorie Taylor Greene (R-GA) by name as an example.
The fact that Biden’s first veto is about promoting ESG reveals the problem: this isn’t the invisible hand of the “free market.” It’s the invisible fist of government. Don’t fall for their trick. https://t.co/qUeWxwgpxH
— Vivek Ramaswamy (@VivekGRamaswamy) March 20, 2023
The issue of ESG investing has generated controversy, with some Republicans accusing the Biden administration of pushing a leftist agenda and prioritizing progressive policies over Americans’ retirement savings.
Proponents of ESG investing argue that it is another factor managers should consider when making investments. ESG factors can include:
- Divesting from fossil fuels.
- Supporting LGBTQ+ rights.
- Ensuring diversity among board members.
- Taking stances on human rights issues and setting policies based on climate change.
The people who manage your retirement savings should only have one thing to consider: Your retirement security.
Once again Biden is prioritizing far-left special interests over the economic well-being of the American people.
— Tommy Pigott (@TommyPigott) March 20, 2023
The veto comes as 18 states, led by Florida Gov. Ron DeSantis (R), announced an alliance to counter the Biden administration’s ESG agenda. The states aim to leverage their pension funds to force changes in how prominent asset managers invest Americans’ money, emphasizing maximizing shareholder value over the spread of “woke ideology.”
Despite the criticism, it is essential to note that presidential vetoes have become less common in recent administrations. Former Presidents George W. Bush, Barack Obama, and Donald Trump each issued a dozen or fewer vetoes during their time in office. In contrast, former Presidents Bill Clinton and George H.W. Bush each issued more than three dozen vetoes.
With the current makeup of Congress, it is unlikely that the legislative branch will overturn Biden’s veto. This situation highlights the ongoing debate around the role of ESG factors in investing and raises questions about the balance between financial returns and addressing broader societal concerns. While the Biden administration’s commitment to progressive policies remains evident, the GOP must fight to ensure that economic stability and retirement security are not compromised.