The U.S. House of Representatives were unsuccessful on Thursday to override President Joe Biden’s first veto of a resolution preventing environmental, social, and governance (ESG) factors in retirement plan investments.
To override the veto, the House would have needed a two-thirds majority vote from both chambers. Instead, the override fell short on a 219 to 200 vote that was mainly opposed by Democrats with Rep. Jared Golden (D-ME) as the only Democrat to vote on overriding. Fifteen members of Congress did not vote.
President Joe Biden issued his first presidential veto on the measure Monday, after Congress acted to overturn the ESG rule earlier this month. The Senate had formerly voted 50-46 to pass the Congressional Review Act (CRA), a resolution that would have blocked the Department of Labor (DOL) from enforcing the rule. The House of Representatives had approved the CRA on March 1, in a 216 to 204 vote.
The unsuccessful attempt on overriding comes as several organizations vocalize their support for the veto. The American Retirement Association (ARA) and the Defined Contribution Institutional Investment Association (DCIIA) have since both stated their support for the rule.
“ERISA has long held that the financial interests of retirement plan participants are to be the sole consideration of fiduciaries in selecting and monitoring plan investments,” stated Brian Graff, CEO of the American Retirement Association, in a statement. “We enthusiastically support the language and intent of this important regulation in codifying that interpretation, and in providing plan fiduciaries the freedom they need and deserve to fulfill their important duties.”
Senator Patty Murray (D-WA) also remarked on her support for the rule, which she said provides a neutral stance on how ESG factors are taken into consideration, as long as the investment fund meets its fiduciary obligations.
Republican lawmakers have staunchly opposed the DOL’s ESG rule—otherwise known as the Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights—claiming the rule hurts retirement plan investors by pushing a liberal “woke” agenda.
Just last week, Florida Gov. Ron DeSantis and 18 other governors reduced ESG investing as “fraud” in a statement that accused the Biden Administration of weakening the U.S. economy. Led by Gov. DeSantis, the alliance included governors from Alabama, Alaska, Arkansas, Georgia, Idaho, Iowa, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Oklahoma, South Dakota, Tennessee, Utah, West Virginia, and Wyoming.
Now, eyes are on two lawsuits issued earlier this year against the DOL’s ESG rule. In January, a coalition of over two dozen states sued the Biden Administration in an effort to halt the rule, which has been in effect since January 30. Later in February, the Wisconsin Institute for Law and Liberty (WILL) sued the administration for permitting the use of ESG factors in 401(k) accounts and accused it of violating the Employee Retirement Income Security Act of 1974 (ERISA).
SEE ALSO: