US president Joe Biden has used his first presidential veto to reject a bill passed in the Senate that would block the Department of Labor (DOL)’s ESG rule for retirement plans.
Reuters reported that in a video posted on Monday to Twitter, Biden said: “I just signed this veto because the legislation passed by the Congress would put at risk the retirement savings of individuals across the country.”
The DOL’s rule allows plan fiduciaries to consider ESG factors when selecting investments. The measure replaced a Trump administration rule that critics said would have had a chilling effect on the use of ESG in retirement accounts.
Earlier this month the Senate has voted 50-46 to block the rule, with the Senators introducing their bill casting it as “politiciz[ing] millions of Americans’ retirement investments to favor Biden’s ideological preferences rather than getting the best returns for Americans.”
Commenting on the presidential veto, non-profit JUST Capital said it was a shame ESG had become political football.
“ESG has become politicized, but the truth is it was never about politics, and for many in the industry, it still isn’t. It’s about smarter investing and better business,” it said in a statement.
“When asked specifically about ESG regulation in our recent focus groups, most respondents, regardless of political affiliation, said they prefer to let financial service providers use their expertise to make decisions when it comes to what factors to evaluate and where to make investments.”