The Mercury News

Biden issues first veto to protect socially conscious investing

- By Katie Rogers

“This bill would risk your retirement savings by making it illegal to consider risk factors MAGA House Republican­s don't like.” — President Joe Biden

President Joe Biden issued the first veto of his presidency Monday, turning back a Republican effort to bar investment managers from incorporat­ing climate and social considerat­ions into their decisions.

The rule that the president vowed to protect is an obscure investing principle known as ESG — shorthand for prioritizi­ng environmen­tal, social and governance factors. It had been a widely accepted norm in financial circles for almost 20 years until Republican­s recently started assailing it as “woke capitalism” that injected Democratic and liberal values into financial decisions. More than $18 trillion is held in investment funds that follow the ESG principle.

Biden defended the veto on Twitter, accusing far-right Republican­s of doing the same thing they are accusing Democrats of doing: imposing their views on the rest of the country.

“This bill would risk your retirement savings by making it illegal to consider risk factors MAGA House Republican­s don't like,” the president said, referring to the wing of the party that supports former President Donald Trump. “Your plan manager should be able to protect your hard-earned savings — whether Rep. Marjorie Taylor Greene likes it or not.”

The Senate passed the resolution this month by a vote of 50-46 after two Democrats, Sens. Jon Tester of Montana and Joe Manchin of West Virginia, joined every Republican. The vote, which came the day after the House approved the measure on a mostly party-line vote, cleared the measure to be sent to the White House, where Biden's advisers were expecting him to veto it.

Officials in Republican­led

states have argued that the rule will lead to disinvestm­ent in fossil fuel companies that provide tax revenue and jobs in their states. On Monday, Manchin, who up for reelection in a coal state, criticized the president's decision to veto the measure.

“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,” Manchin, who had warned that the ESG rule could pose risks to energy security, said in a statement.

Speaker Kevin McCarthy, who last week held a signing ceremony to nullify the ESG rule, said Biden had sided with “woke Wall Street” over American workers. “Now — despite a bipartisan vote to block his ESG agenda — it's clear Biden wants Wall Street to use your retirement savings to fund his far-left political causes,” McCarthy wrote on Twitter.

Democrats have accused Republican­s and others who supported overturnin­g the rule of not understand­ing its purpose.

“So, for instance, just as a hypothetic­al, if you are against investing in so-called `woke causes,' you are actually laying out your own ESG criteria,” Sen. Patty Murray of Washington said this month. “And here's the thing: The Biden administra­tion rule would allow that.”

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