Sen. Joe Manchin (D-WV) harshly criticized Joe Biden for vetoing a bill against ESG policies in retirement investments which had bipartisan support. Manchin claimed Biden was prioritizing a “radical policy agenda” instead of the “best financial returns for millions of Americans’ retirement investments.”
The Senate voted to overturn a Labor Department rule allowing retirement fund managers to consider environmental, social, and corporate governance impacts in their portfolio decisions. This entails these fund managers can consider leftist activism, like climate change and social justice when allocating their clients’ hard-earned money. Two liberal senators supported this bill, Sen. Joe Manchin (D-WV) and Sen. Jon Tester (D-MT), who were acting in the interest of their conservative constituents. Despite this bipartisan support, Joe Biden followed through on his promise to veto the legislation to pursue his administration’s woke ESG activism.
Manchin said, “This Administration continues to prioritize their radical policy agenda over the economic, energy, and national security needs of our country, and it is absolutely infuriating. West Virginians are under increasing stress as we continue to recover from a once-in-a-generation pandemic, pay the bills amid record inflation, and face the largest land war in Europe since World War II,” Manchin continued. “The Administration’s unrelenting campaign to advance a radical social and environmental agenda is only exacerbating these challenges.”
“This ESG rule will weaken our energy, national and economic security while jeopardizing the hard-earned retirement savings of 150 million West Virginians and Americans,” Manchin stated. “Despite a clear and bipartisan rejection of the rule from Congress, President Biden is choosing to put his Administration’s progressive agenda above the well-being of the American people.”
Sen. Mike Braun (R-IN), the Senate’s lead sponsor of the bill, also slammed the ESG rule: “The last thing we should do is encourage fiduciaries to make decisions with a lower rate of return for purely ideological reasons.” However, Majority Leader Chuck Schumer (D-NY) defended the potential leftist activism of fund managers by stating, “This isn’t about ideological preference — it’s about looking at the biggest picture possible for investors to minimize risk and maximize returns. Why shouldn’t you look at the risks posed by increasingly volatile climate incidents?”
Maximizing returns and minimizing risk was already the fiduciary responsibility of a fund manager. Therefore, if there were a potential climate-related risk to an investment, it would be considered. However, Schumer is not discussing the Republican critique that the rule could allow managers to place their ideological beliefs above the returns for their clients, as highlighted by Sen. Braun pointed out. For example, if investing in a profitable oil company would produce the greatest returns for a client, the fund manager may forgo the investment due to its likely impacts on climate change. Therefore, the client could miss out on superior returns and be worse off during retirement.
The current Labor Department rule is a rollback of Trump-era legislation that required retirement funds to only focus on producing the best returns for their clients. The House has indicated they will seek to override Biden’s veto. However, given the Democrat majority in Congress, it is unlikely to achieve two-thirds support in both chambers.
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