The Biden administration has been facing pushback on its progressive investment policies, with Republicans rallying against what they call “woke” investing. The House voted Tuesday to kill a Biden administration rule encouraging retirement plan fiduciaries to invest in ESG companies, which the GOP has labeled as a form of “social engineering” that could hurt retirement savers. On Wednesday, the Senate followed suit and passed a resolution to overturn the Department of Labor rule that allows retirement plans to consider environmental, social and corporate governance principles.
The rule, which took effect earlier this year, encourages investment managers to factor environmental, social, and corporate governance (ESG) factors into their decision-making when investing retirement savings. It requires retirement plan fiduciaries to consider non-financial factors when making decisions about investments. The Department of Labor has argued that the rule protects savers from investments that could be harmful to their long-term financial security, such as those with excessive fees or investments in companies with poor environmental or social records.
The move to overturn the rule has been met with fierce opposition from progressive groups, who argue that it is an attack on the Biden administration’s efforts to promote responsible investing. They argue that ESG factors can be integral to a company’s long-term success, and that considering them can help invest in companies that are better for the environment and society.