ESG – it might not be a familiar acronym to most Americans yet, but Republicans are hoping it will be in upcoming campaigns. It stands for environmental, social and corporate governance principles.
Last year, the Biden Labor Department adopted a rule making it easier for retirement plans to take into account factors that fall under that umbrella. Think issues like climate change or an emphasis on diversity in hiring.
Congressman Barr’s argument: Americans deserve maximum financial performance, and consideration of environmental or social impacts could cut into how much they’re able to save.
"They deserve and need returns. They don't need a regulation from Washington that steers them into higher fee, lower performing, less diversified funds — and that's what these so-called ESG funds are."
Like other Republicans, Barr has labeled the ESG investment rule a “woke” regulation that puts politics above people. He had led efforts to get the rule overturned.
"They deserve and need returns. They don't need a regulation from Washington that steers them into higher fee, lower performing, less diversified funds — and that's what these so-called ESG funds are."Congressman Andy Barr
But in his veto announcement, President Biden described the anti-ESG bill as one that would allow retirement managers to ignore “relevant risk factors” like those caused by a changing climate or poor corporate governance.
House GOP leaders say they expect to hold a vote to override the veto, which would require a two-thirds majority in both chambers. While the push to eliminate the ESG rule did win the backing of a small handful of Democrats, it’s unlikely to be anywhere close to enough to override Biden’s veto.
