President Biden’s veto is expected.
Late last year, the Department of Labor modified its rules, explicitly permitting retirement plans to offer Environmental, Social, and Governance (ESG) options. ESG investing broadly affects individual retirement and 401(k) plans.
For some retirement fund managers, it means full divesting in fossil fuels. For others, it is a more positive approach toward investing in clean energy. But that is only the environmental component. Social policies, such as promoting diversity, as well as company governance like diversification on boards of directors, are also to be taken into account.
The House of Representatives voted last month to block the administration’s ESG requirements. The measure would prevent the Labor Department from enforcing the rule that makes it easier for ESG factors to receive top consideration on investments. The Senate voted this week to block the asset-management rule.
Some asset managers, such as Vanguard, have said they will not pledge to enforce ESG investment citing their fiduciary duty to their investors to make the best risk-reward ratio choices. Others, such as BlackRock strongly support the ESG pledge.
Before any votes were taken, President Biden said he would veto the measure if it reached his desk.
As the Lord Leads, Pray with Us…
- For members of the House as they take up legislation to address pressing matters that face the nation.
- For senators as they vote on legislation that would provide guidance for executive agencies.
- For the president to consider the benefit to Americans as they save and invest in retirement funds.
Sources: Business Insider, Reuters, The Hill, Just the News
