Biden promises to veto resolution, maintain ESG rule (2023)
| Environmental, social, and corporate governance |
|---|
|
| • What is ESG? • Enacted ESG legislation • Arguments for and against ESG • Opposition to ESG • Federal ESG rules • ESG legislation tracker • Economy and Society: Ballotpedia's weekly ESG newsletter |
President Biden promised to veto a Congressional Review Act (CRA) resolution to rescind the Biden Labor Department rule permitting the use of ESG investing in ERISA-governed retirement plans, which will mark the first veto of his presidency. The Wall Street Journal Editorial Board called the veto announcement revealing:
| “ |
The Biden rule reversed a Trump-era clarification of the 1974 Employee Retirement Income Security Act (Erisa), which required retirement plan fiduciaries to consider solely “pecuniary” factors that have a “material effect” on investment risk or return. Erisa is intended to prevent retirement funds from using savings for their own purposes. The Biden rule protects fiduciaries from lawsuits for considering ESG factors that could be “relevant” to investment performance such as a company’s greenhouse-gas emissions or workforce diversity. This broad standard would essentially let managers invest retirement savings however they want. The rule would also augment the power of proxy advisory duopolists Glass Lewis and Institutional Shareholder Services (ISS) by directing fiduciaries to “rely on efficient structures” such as “proxy advisors/managers that act on behalf of large aggregates of investors.” ISS and Glass Lewis are voting force multipliers on ESG shareholder resolutions. The rule would drive more savings into ESG funds that typically charge higher fees by letting retirement sponsors offer them as default options in 401(k) plans. Workers can opt out of default plans but usually don’t. Why isn’t Mr. Biden lambasting ESG funds for charging “junk fees”? … Mr. Biden claimed in a veto threat that returning to the Trump rule “would be interfering with the market,” supposedly because asset managers want free rein to consider ESG factors. Sorry, what’s good for BlackRock isn’t always good for workers, and protecting retirement savings isn’t interfering in markets.[1] |
” |
See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
| |||||||||||||||||||||||
