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2 Senate Democrats join GOP in rejecting socially conscious investing rule, rushing it back to Biden for a promised veto

Mar 2, 2023, 05:33 IST
Business Insider
US President Joe Biden speaks during a press conference where he announced Julie Su as his nominee to be the next Secretary of Labor during an event in the East Room of the White House on March 1, 2023, in Washington, DC.Win McNamee/Getty Images
  • The US Senate voted down a Biden-backed socially conscious investing rule 50-46.
  • Two Democratic senators up for reelection in 2024 joined Republicans in opposing ESG.
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Two reelection-wary Democratic senators joined a united GOP caucus in disapproving of a Labor Department rule allowing for socially conscious investing by retirement fund managers, a procedural loss the Biden administration can overcome with a promised veto.

Wednesday's defectors, both of whom are facing tough reelection bids this cycle in states Donald Trump won by double digits in 2020, include Democratic Sens. Joe Manchin of West Virginia and Jon Tester of Montana.

The duo joined the 48 Senate Republicans present in spiking the DOL rule allowing investment advisors to consider "the economic effects of climate change," voting it down 50-46.

The absence of Democratic Sens. Dianne Feinstein of California, Jeff Merkley of Oregon, and John Fetterman of Pennsylvania left Senate Majority Leader Chuck Schumer three votes down before deliberations even started. Republican Sen. Mike Crapo of Idaho also missed votes throughout Wednesday.

Congressional Review Act resolutions like the one challenging the ESG rule only require a simple majority vote, rather than the 60-vote threshold required to break a standard filibuster.

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Republican Sen. Mike Braun of Indiana, who led part of the multi-pronged effort to thwart Biden's proposal and stir up conservatives ahead of the 2024 elections, told Insider that he doubted that the Senate or House could muster the two-thirds majority vote in each chamber to override the looming presidential veto.

But he said putting Biden on the defensive feels "pretty good."

"Biden will have to explain why he thinks it's a good idea to put a rule in place that would give him a 30% lower return," Braun said at the US Capitol.

The GOP's ongoing battle against environmental, social and corporate governance issues seeks to curtail the billions of dollars in ESG-related investments already coursing through state-run pension funds and personal 401k retirement accounts.

Opponents like Republican Sen. Ron Johnson of Wisconsin maintain that considering ESG to any degree puts political ideology above financial returns.

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Democratic Sen. Tina Smith of Minnesota begged to differ, telling colleagues on the Senate floor that the Biden rule "doesn't force choices, it creates choices."

Congress can't do much else to counter ESG at this point, Braun conceded.

But he said all hope isn't lost.

"The only other part of government that could weigh in on it would be the courts," Braun said, dangling the possibility that a circuit court judge or the US Supreme Court could still intervene somewhere down the line.

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