President Joe Biden has officially issued his first veto, blocking a Republican effort to stop retirement fund managers from considering environmental and social concerns — or ESG — in their investments.
“There is extensive evidence showing that environmental, social, and governance factors can have a material impact on markets, industries, and businesses,” Biden wrote in a message to the House accompanying his decision.
The veto was inevitable, but changing the rule was never Republicans’ main goal. Instead, they sought to frame this specific approach to investing — and the administration’s support of it — as “woke,” in an attempt to make it the centerpiece of their latest culture war.
As Vox’s Rebecca Leber explains, considering ESG factors involves evaluating how a company might approach subjects like climate change or employees’ working conditions as part of the decision to invest in it, but it doesn’t necessarily include altruistic aims. According to financial experts, a big reason to weigh environmental and social concerns is because of the risk they could pose to a company’s returns.
The resolution, ultimately, is a prime example of a spate of recent Republican efforts to force Democrats into taking stances on issues the GOP aims to use against them in future campaign attacks. In addition to the anti-ESG measure, Republicans have pushed resolutions about crime and Covid-19, both of which are intended to underscore splits among Democrats and make vulnerable lawmakers take tough votes.
“What we’ve seen over time is [these resolutions have] become attractive as a way to force messaging votes, even if there’s no expectation that it’s going to work,” says Brookings governance studies fellow Molly Reynolds.
ESG is among the issues Republicans are trying to harp on for messaging
Biden’s veto effectively allows money managers overseeing retirement funds to continue using environmental, social, and corporate…
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