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Senate Votes to Block Biden Rule Allowing Retirement Fund Managers to Prioritize Social Causes

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Senate Votes to Block Biden Rule Allowing Retirement Fund Managers to Prioritize Social Causes

Rep. Andy Barr speaks as U.S. Secretary of State Antony Blinken testifies before the House Committee on Foreign Affairs on Capitol Hill in Washington, D.C., March 10, 2021. (Ting Shen/Pool via Reuters)

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By JEFF ZYMERI

March 1, 2023 5:41 PMListen to article

On Wednesday, the Senate voted 50-46 to block a Biden administration rule that allows retirement plan fiduciaries to consider environmental, social, and governance (ESG) factors in investment decisions.

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The Labor Department enacted a rule last year to make it easier for investors to take into account climate change and other social factors that are not solely focused on profitability and returns for retirees. Republicans have classified the rule as one of many “woke” moves by the Biden administration that will materially hurt Americans.

The House voted 216-204 Tuesday to block the rule. In both chambers, Republicans were able to peel off members of the Democratic caucus. Jon Tester and Joe Manchin joined Republicans in the Senate, and Maine representative Jared Golden did the same in the House.

“This Congressional Review Act measure that I am offering is a bipartisan, bicameral joint resolution disapproving of a Department of Labor rulemaking that will politicize Americans’ retirement accounts and jeopardize their retirement security,” explained Kentucky representative Andy Barr, who introduced the House measure.

According to Barr, the plan will saddle Americans with higher fees for less-diversified investments in lower-performing portfolios.

The Congressional Review Act is an oversight mechanism Congress can use, overturning final rules issued by federal agencies.

The bill now moves to the president’s desk. Biden has vowed to veto it.

“The rule reflects what successful marketplace investors already know – there is an extensive body of evidence that environmental, social, and governance factors can have material impacts on certain markets, industries, and companies,” explained the White House in a statement.

Speaking on the Senate floor, majority leader Chuck Schumer defended the Labor Department rule.

“This isn’t about ideological preference — it’s about looking at the biggest picture possible for investors to minimize risk and maximize returns,” said Schumer. “Why shouldn’t you look at the risks posed by increasingly volatile climate incidents?”

Other prominent Republicans slammed the rule for the damage it could lead to in the future.

“This is how the left always operates. This is just the first step. If we let this continue, the left will use ESG investing to push non-compliant companies out of the marketplace,” explained North Carolina representative Virginia Foxx on the House floor Tuesday.

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