Sen. Joe Manchin (D-WV) rebuked President Joe Biden for his veto of a resolution that would have prevented fiduciaries from investing retirement funds in accordance with the environmental, social, and corporate governance movement, also known as ESG.
The Labor Department recently issued a final rule that reversed a prohibition of retirement investments made with ESG criteria established under the Trump administration. Members of the House and Senate approved a resolution earlier this month nixing the final rule, and Biden issued the first veto of his tenure on Monday to block the resolution.
Manchin, widely regarded as a centrist and a prominent critic of some Biden administration policy priorities, issued a statement condemning the “absolutely infuriating” veto.
“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,” he said. “The administration’s unrelenting campaign to advance a radical social and environmental agenda is only exacerbating these challenges.”
Sen. Jon Tester (D-MT) also voted with Republican colleagues to reverse the final rule. Both Manchin and Tester are campaigning to retain their Senate seats in heavily conservative states.
“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 added. “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.”
Skeptics of the ESG movement assert that the investment philosophy intermixes political and social causes, such as decreasing carbon emissions or diversifying company leadership with respect to race or sex, in a manner that compromises or distracts from profitability. They point to lackluster performance from ESG funds amid market turmoil over the past year as evidence that the approach fails to set aside ideological preference when performance declines.
Republicans had lauded the resolution as a rebuke of the White House’s nods toward the ESG movement. Biden, however, claimed on Monday that the “Republican-led resolution would force retirement managers to ignore” risk factors such as climate change, as well as disregard “the principles of free markets” and harm the retirement savings of American families.
American investors, on the other hand, are skeptical of the ESG movement and desire that their funds are allocated in a politically neutral manner. An exclusive poll from The Daily Wire showed last year that 64% of respondents believe “individual investors whose savings are being invested” should decide whether funds are appropriated according to ESG standards, while a mere 20% believe that “Wall Street asset managers” should make such decisions.
Biden signed an executive order months into his tenure asserting that the “intensifying impacts of climate change present physical risk to assets, publicly traded securities, private investments, and companies.” The administration therefore established the Climate-Related Financial Risk Advisory Committee to “understand and mitigate the risks that climate change poses” to economic stability. The body includes members of government agencies, prominent academics, and employees of private entities such as JPMorgan Chase and the Bezos Earth Fund.