Matt Bush, FISM News
On Wednesday, the Senate passed a disapproval resolution with bipartisan support that would overturn a Labor Department rule permitting retirement fund managers to primarily consider environmental, social, and governance (ESG) issues in their investment decisions.
President Joe Biden is expected to veto the bill as the White House released a Statement of Policy saying, among other things, “If the President were presented with H.J. Res. 30, he would veto it.”
The measure, after passing the House in a 216-204 vote, needed only a simple majority to pass the Senate. Two Democrats, Joe Manchin (W.Va.) and Jon Tester (Mont.), voted alongside 48 Republicans to send the bill to President Biden’s desk.
“The last thing we should do is encourage fiduciaries to make decisions with a lower rate of return for purely ideological reasons,” said Sen. Mike Braun of Indiana, the Senate’s lead sponsor of the bill.
In saying this, Braun defined what many on the right are calling “woke capitalism.” It is the idea that CEOs, investors, and companies allow their political ideologies to affect their bottom line.
Florida Gov. Ron DeSantis (R) defined woke capitalism well in his recent book:
Woke capital exerts a pernicious influence on society in several ways. Corporations politicize the economy when they leverage their economic power to take positions on issues that do not directly affect their businesses. Of course, it is a free country, and they have the right to take these positions, but it is not healthy when a market-based economy becomes an extension of political factionalism.
The ESG investment rule is a prime example of that as it covers plans that collectively invest more than $12 trillion on behalf of more than 150 million Americans. It overturned a Trump-era rule that required plans to invest solely on financial considerations.
Supporters of ESG note that it is a voluntary rule so it did not require fund managers to do anything, it simply released them from the Trump-era rule that “required that managers of federally governed pension funds limit their investment decisions only to what would generate the highest returns, effectively prohibiting them from considering other factors.”
“Republicans talk about their love of free markets, small government, and letting the private sector do its work,” White House Press Secretary Karine Jean-Pierre said Wednesday. “The Republican bill is opposite of that. It forces MAGA Republicans’ ideology down the throats of private sector and is handcuffing investors as well.”
That “MAGA ideology” described by the Press Secretary could be simply stated as one that wants investors and fund managers to invest based on decisions that will make investors the most money and nothing else. An ideology that most investors probably assume about the people to whom they entrust their financial futures.
“President Biden wants to sacrifice seniors’ retirement savings to fund his political agenda. Both the Senate and the House have now sent powerful, bipartisan rebukes of the Biden ESG agenda. I’m proud to stand up for Americans’ retirement savings to stop this harmful rule,” Senator Braun told Fox News.