President Joe Biden vetoed a resolution Monday that would have voided regulations allowing environmental, social and governance elements to factor in employer-sponsored retirement plans.
The veto is the president’s first and protects a 2022 U.S. Department of Labor rule that permits retirement plan fiduciaries to consider such factors. It took effect in January.
The rule “allows retirement plan fiduciaries to make fully informed investment decisions by considering all relevant factors that might impact a prospective investment, while ensuring that investment decisions made by retirement plan fiduciaries maximize financial returns for retirees,” Biden said in a statement.
The resolution, passed March 1, would have forced retirement managers to ignore risk factors, disregarding the principles of free markets and jeopardizing the life savings of working families and retirees, Biden continued. “In fact, this resolution would prevent retirement plan fiduciaries from taking into account factors, such as the physical risks of climate change and poor corporate governance, that could affect investment returns.”
The regulation reversed a Trump-era rule that, according to Biden’s DOL, discouraged fiduciaries from considering ESG factors, even when such considerations were in the financial interest of plans.