By David Morgan
WASHINGTON (Reuters) -The Republican-controlled U.S. House votes on Tuesday on a bill to block President Joe Biden’s administration from allowing retirement plans to consider environmental, social and corporate governance, or ESG, issues in their investment decisions.
Republicans expect to adopt the measure in a late afternoon House of Representatives vote, and could have enough Senate support to send it on to Biden, a Democrat who the White House has said would veto the bill that would block his own Labor Department from enforcing a new ESG rule.
Senate Republican leader Mitch McConnell said the bill would ensure that plan managers consider only financial returns in making investments, and not “extraneous factors” such as environmental pollution and employment policies.
“I’ll be proud to support this common-sense measure later this week,” McConnell said in a floor speech.
It is the latest salvo in the Republican culture war against the use of issues that promote environmental interests, social equality and corporate responsibility in business and investment decisions.
The battle is likely to intensify as the 2024 presidential campaign gets under way. Florida Governor Ron DeSantis, widely seen as a leading White House contender, has already made his own fight against “woke” businesses a hallmark of his image.
The Labor Department rule, which covers plans that collectively invest $12 trillion on behalf of more than 150 million people, makes it easier for plan managers to consider climate change and other environmental, social and governance factors when they make retirement investments and exercise shareholder rights, such as proxy voting.
It also requires plans to pursue traditional financial considerations.
The Republican joint resolution stipulates that the rule “shall have no force or effect.”
“Retirement plans should be solely focused on delivering maximum returns, not advancing a political agenda,” said Republican Representative Andy Barr, who introduced the House resolution.
The measure is widely expected to pass the House, where Republicans hold a slim 222-212 seat majority.
A vote could follow as soon as Wednesday in the Senate, where Democrats have a 51-49 majority. Republicans have support from all 49 of their members and Democratic Senator Joe Manchin. But they could need an additional Democrat or of the three independents who normally vote with the Democrats to pass the measure on a simple majority.
“There are going to be two or three votes, I think, that won’t reveal themselves until you get on the floor,” said Republican Senator Mike Braun, who introduced the Senate measure.
Braun is bringing the resolution under the Congressional Review Act, which bypasses the Senate’s “filibuster” rule that requires the support of 60 senators to pass most legislation.
The White House on Monday said that Biden would veto the bill if it reached his desk.
“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,” it said in a statement.
Last week, 25 Republican-led states asked a federal judge in Texas to block the same rule, warning that the regulation could lead to millions of Americans losing retirement investments and harm state finances. Plaintiffs in the case include an oil drilling company and an oil and gas trade group.
(Reporting by David MorganEditing by Scott Malone and Alistair Bell)