GOP and Manchin seek to block Biden-backed ESG investing rule due to ‘political agenda’

A Republican-led group of 50 U.S. senators is seeking to repeal a Biden administration-backed rule that they claim effectively “politicizes 401(k)s of Americans” by allowing pension managers to consider environmental, social, and governance standards, known as “ESRs.”

The group, which includes all 49 Republican senators, as well as moderate Democratic Senator Joe Manchin of West Virginia, aims to change the rules of the Department of Labor, which went into effect Jan. 30.

Senator Mike Brown (R-Ind.), who introduced the resolution along with Rep. Andy Barr (R-Kentucky), said the Biden-backed ESG investing rule change is effectively “jeopardizing the retirement savings of millions of Americans for the sake of the political agenda.” . “.

“At a time when US 401(k)s have already been hit so hard by market downturns and record high inflation, the last thing we should do is encourage fiduciaries to make decisions at lower rates of return for purely ideological reasons. Brown said in a statement.

In recent years, Republican lawmakers have become increasingly wary of ESG-based investments, as critics argue that the desire to consider climate change and other factors in doing business is driven more by leftist ideology than by fundamental principles.

Lawmakers said the ESG rule impacts the retirement savings of 152 million US workers whose accounts are regulated by the Employee Retirement Security Act, or ERISA. This change affected existing ERISA standards.

Manchin said it was “irresponsible for the Biden administration to jeopardize the retirement savings of more than 150 million Americans for purely political purposes.”

“I urge my colleagues on both sides of the aisle to support this important resolution to ensure that Congress promotes the economic security of West Virginians and Americans, and does not exacerbate the serious economic problems they already face,” he added.

More than 100 groups and organizations supported the GOP-backed resolution, including state treasurers from seven states and former Vice President Mike Pence’s Advancing American Freedom political group.

“Most Americans consider it a bad idea for companies to use their financial influence to advance a political or social agenda, as is the case with investing in ESG,” Advancing American Freedom Executive Director Paul Teller said in a letter on behalf of organizations supporting the initiative. permission.

“Forcing Americans to invest in ESG is not only politically inappropriate, but also financially irresponsible,” the letter says.

Last week, a group of 25 Republican state attorneys general filed a lawsuit against the Department of Labor in an attempt to block the ESG rule, Roll Call reports. The change will remain in effect while the court case continues.

The lawsuit argued that the Department of Labor change “contradicts ERISA’s clear direction that fiduciaries act with the sole motive of advancing the financial interests of plan participants and their beneficiaries.”

Florida Gov. Ron DeSantis, the likely 2024 Republican presidential nominee, is one of the most vocal critics of ESG-based taxpayer investment.

In August, DeSantis backed a resolution barring Florida pension funds from considering ESG standards.