Resolution to Block Biden ESG Rule
S.J.Res 8, sponsored by Sen. Mike Braun (R-IN)
H.J.Res. 30, sponsored by Rep. Andy Barr (R-KY)
Summary: Sen. Mike Braun (R-IN) and Rep. Andy Barr (R-KY) have introduced a resolution to block the Biden Administration’s new Environmental, Social and Governance (ESG) rule. The resolution utilizes the Congressional Review Act’s expedited procedures to allow Congress to consider whether to block newly-enacted federal rules.
In a statement, Sen. Braun said, “President Biden is jeopardizing retirement savings for millions of Americans for a political agenda. In a time when Americans’ 401(k)s have already taken such a hit due to market downturns and record high inflation, the last thing we should do is encourage fiduciaries to make decisions with a lower rate of return for purely ideological reasons. That’s why we are proud to stand up against this rule for the millions of Americans who depend on these funds for their retirement.”
Rep. Andy Barr said, ““Retirement plans should be solely focused on delivering maximum returns, not advancing a political agenda. If Congress doesn’t block the Department of Labor’s rule greenlighting ESG investing in retirement plans, retirees will suffer diminished returns on the investment of their hard-earned money.”
Background on ESG: Late in 2022 the Biden Administration finalized a new rule to expand and encourage the practice of retirement plans using workers’ invested funds to support environmental and social causes. Known as ESG (Environmental, Social, and Governance), these investment funds use retirement savings to advance environmental, social, and governance causes. Biden’s ESG rule took effect on January 30, 2023.
In a previous rulemaking, the Trump Administration required plan fiduciaries to only consider financial factors rather than ESG purposes. However, that 2020 rule was rolled back early in the Biden administration as it pursued this new rulemaking to “remove barriers” to ESG investing.
A coalition letter in support of the Braun/Barr resolution, signed by I4AW president Vincent Vernuccio and others, states:
Under the Trump-Pence administration, the U.S. government protected retirees from this kind of abuse by issuing a rule clarifying that, under ERISA, the managers of retirement funds could not engage in ESG investment if it would have a negative impact on retiree’s savings or expose them to additional risks (“Financial Factors in Selecting Plan Investments”).
Tragically, on November 22, 2022, the Biden administration chose to undermine the Trump-Pence safeguards by issuing their own ERISA rule that would make it easier for retirement fund managers to imperil retirees’ savings. With 22 percent of Americans expected to rely upon their retirement savings and benefits in 2050, this policy of misappropriation cannot be allowed to stand.
Background on the Congressional Review Act: The Congressional Review Act (CRA) provides expedited procedures for Congress to review and block federal rules. Under the CRA, a joint resolution of disapproval in the Senate cannot be filibustered and can be called for a vote, after a set period of time, by a discharge petition signed by at least 30 Senators. Congress is able to act in this manner once a federal rule becomes final and for the following 60 “days of continuous session.” If approved by both the Senate and House, the measure requires the signature of the President. In this instance, it can be expected that President Biden would veto a CRA resolution to block his own ESG rule.
Bill status: The Braun/Barr resolution was passed by the House, on a vote of 216-204, and Senate, on a vote of 50-46. President Biden is expected to veto the legislation.
Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights
December 12, 2022
ATR Supports Effort to Nullify Biden Retirement ESG Rule
February 1, 2023
Andy Lewis and Bryan Bashur, Americans for Tax Reform
COALITION LETTER: Oppose Woke 401(k) Rule
February 7, 2023
Senator Braun officially introduces Senate challenge to Biden ESG rule politicizing Americans’ 401(k)s
February 7, 2023, www.braun.senate.gov
PRESS RELEASE: Rep. Barr: Barr Reintroduces Resolution to Block Biden’s Politicization of Retirement Accounts
February 7, 2023, www.barr.house.gov