Biden issues first veto of his presidency to stop Congress from scrapping ESG rule

President Joe Biden vetoed a congressional resolution to cancel a rule by the Labor Department, marking his first veto as president. The rule in question allows retirement plan managers to assess social and environmental issues while making investments. The Republicans and some centrist Democrats have been mounting a campaign to challenge two Biden regulations and a bill that would block a new crime law in Washington, D.C. These lawmakers plan to rescind recently finalized rules with a simple majority vote in both chambers and the president’s signature. The ESG rule allows fiduciaries to weigh ESG factors when making investment decisions for retirement accounts.

The Senate voted 50-46 in favor of rescinding the rule with support from centrist Senators Joe Manchin and Jon Tester. The House passed the rollback with a vote of 216-204, where Jared Golden was the lone Democratic defector. Republicans have been opposing ESG as they fear it could lead to blacklisting fossil fuel companies. Both West Virginia and Montana, represented by Manchin and Tester, rely heavily on coal.

Anti-ESG sentiment has been growing among Republicans, who have used their power to combat ESG at the state level too. Attorneys general from over two dozen states filed a lawsuit in January against the Biden administration over the Labor Department’s ESG rule. West Virginia also deemed five financial institutions ineligible for state banking contracts for boycotting fossil fuel companies. Oklahoma Treasurer Todd Russ announced last month that he plans to blacklist financial institutions that boycott energy companies, barring them from billions of dollars in government entities’ access.