The Senate overturned the Department of Labor’s (DOL) rule on environmental, social, and governance (ESG) investing, in a stunning loss that will force President Biden’s hand to veto the measure.
The Senate voted 50-46 to pass the Congressional Review Act (CRA), a measure that would block the DOL from enforcing the rule. While the Senate is largely Democratic, Sen. Jon Tester (D-MT) and Sen. Joe Manchin (D-WV) voted to pass the resolution. The House of Representatives had previously approved the CRA on Tuesday, in a 216 to 204 vote.
“I’m opposing this Biden administration rule because I believe it undermines retirement accounts for working Montanans and is wrong for my state,” Tester said in a statement.
Before the vote, Republican and Democratic lawmakers took the Senate floor to urge colleagues to vote against or for the resolution.
Manchin labeled the DOL rule as “just another example of how our administration prioritizes a liberal policy agenda over protecting and growing the retirement accounts of 150 million Americans,” while Senate Majority Leader Chuck Schumer accused the Republican party of dismissing ESG as a political agenda.
“They’re using the same tired attacks we’ve heard for a while now—that this is more wokeness, that it is an intrusion into markets and on and on and on,” said Schumer on the Senate floor.
Schumer reiterated that the Labor Department’s rule is not a mandate for plan fiduciaries to enact ESG in workplace plans, just a clarification that they can. “It merely says that if fiduciaries wish to look at ESG factors—and if their methods are shown to be prudent, it’s a very narrow rule—then they have the freedom to do so…”
Sen. Patty Murray (D-WA), also speaking from the Senate floor, doubled down on similar remarks with investment neutrality. “This rule isn’t about saying the left or the right take on a given environmental, social, or governance issue is ‘correct,’” said Murray. “It’s about acknowledging these factors are reasonable for asset managers to consider. It’s about risk mitigation to safeguard retirement plan savers’ nest eggs. It’s about letting these asset managers do their jobs without government getting in the way. That should not be controversial—it should be common sense.”
Republican lawmakers immediately took to Twitter to voice their appraisals of the vote, again rejecting the rule as a “woke” political agenda by the Democrat party.
“The Senate made the right decision to vote down Biden’s rule to harm Americans’ retirement savings,” wrote Sen. Mike Braun (R-IN) on Twitter. “I am proud to lead this bipartisan challenge.”
“Great to partner with @SenatorBraun to stand up for the American people,” responded Rep. Andy Barr (R-KY), who sponsored the resolution. “President Biden should abandon the radical climate activists and join us in putting middle-class savers ahead of politics.”
With both the House and Senate passing the measure, it will now move onto Biden’s desk. The White House said on Monday that Biden would veto the bill if it passed Congress. In this case, Congress would need to pass the CRA again in a two-thirds majority vote.
The ESG rule has faced large opposition from Republican-backed organizations and lawmakers since its announcement in November. Since then, it has been the target of two lawsuits—one by a conservative nonprofit and another by a coalition of 25 GOP-led states.
SEE ALSO:
- House Approves Measure Blocking DOL ESG Rule
- Democrats Push for ESG in Retirement Plans with New Bill
- DOL’s Walsh, Gomez Discuss New ESG Rule
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.