The U.S. House failed Thursday to override President Joe Biden’s first veto — of a Republican-led bill that would have banned the consideration of environmental, social or governance issues in retirement and other investment decisions.
Republicans failed to mount the necessary two-thirds votes needed in the House to override the president’s veto of the “ESG” investment bill.
The override failed on a 219-200 vote mostly along party lines as most Democrats opposed.
The standoff was a first test of the strength of the new Republican majority in the House as it confronts the Democratic president in the White House.
House Republicans had succeeded in passing the legislation through Congress last month, part of their agenda to undo so-called “woke” government policies that strive to bring new ways of thinking about social and environmental issues with equity and accountability
The effort to overturn the veto was not expected to be successful — only one House Democrat supported the initial resolution — but it put most of the Democratic caucus on record as supporting this type of investing for the second time. Two Senate Democrats voted for the disapproval resolution in the upper chamber.
Veto overrides are very rare for Congress. During the Trump administration just one veto was overridden — the president’s rejection of a mammoth defense bill. Former President Obama’s eight years in office only saw one veto override, and former President George W. Bush had four of his vetoes overridden.
The Biden administration rule targeted by Republicans clarifies that money managers can weigh climate change and other ESG — which stands for environmental, social and governance — factors when they make investment decisions related to retirement accounts.
It replaces a previous Trump administration rule that said money managers could only make investments based on financial considerations. Critics of the Trump rule have called it confusing, and the Biden administration has said that it discouraged consideration of ESG factors “even in cases where it is in the financial interest of plans to take such considerations into account.”
The pushback against the idea of “ESG” investing, which takes into account a company’s environmental social and governance record, including on issues like climate change, which some legislators have decried as “woke.”
Republicans argue that considering these types of factors can come at the expense of profits, and they warn that it could harm the fossil fuel industry, which is causing the destruction of Earth’s capacity to sustain life.
Including such factors in financial planning has gained in popularity as Americans seek different options for where they park their retirement savings and other investments.
The U.S. Department of Labor had issued a rule last December saying investment plan fiduciaries may consider climate change and other environmental, social, and governance factors in making investment decisions.
But the newly empowered House Republicans sought to roll back the Labor Department rule and effectively reinstate a Trump-era policy banning the investment practice. The measure gained some support in the Democratic-held Senate.
Using special procedures, the House and Senate approved the rollback with a simple majority in both chambers, but there was not enough support in Congress to mount the veto override.
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