Sen. Joe Manchin (D-WV) and 48 Republican senators signed on to a measure Wednesday to cancel a Biden administration rule allowing retirement plan managers to consider environmental and social issues when making investment decisions.
Lawmakers have pushed back on the rule, arguing that it would unfairly politicize retirement funds for millions of people.
The rule, announced in November by the Department of Labor, allows fiduciaries to weigh the environmental, social, and governance factors, also known as ESG factors , when making investment decisions for U.S. retirement accounts rather than considering solely the rate of return.
The challenge is being led in the Senate by Mike Braun (R-IN). Rep. Andy Barr (R-KY) is leading a House version of the legislation.
Opponents have argued that the plan penalizes fossil fuel companies and allows for ideologically fueled investments, even at the expense of unknowing people.
Both versions of the resolution will be brought to the floor for a full vote under the Congressional Review Act, which allows Congress to cancel rules put out by the administration through an expedited process. President Joe Biden could still veto the resolution, though.
Biden “is jeopardizing retirement savings for millions of Americans for a political agenda,” Braun said in a statement released alongside the resolution Wednesday.
“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," he said.
Republican state officials have sought to target ESG investing rules, and what they describe as corporate overreach, for months.
Last week, more than two dozen Republican attorneys general filed a lawsuit against the ESG rule, arguing that it is a violation of the Employee Retirement Income Security Act, which mandates that retirement plan assets should solely be invested to the benefit of participants.
“The Biden Administration is promoting its climate change agenda by putting everyday people’s retirement money at risk,” said Utah Attorney General Sean Reyes, who filed the lawsuit along with 24 other Republican attorneys general.
“Americans are already suffering from the current economic downturn. Permitting asset managers to direct hard-working Americans’ money to ESG investments puts trillions of dollars of retirement savings at risk in exchange for someone else’s political agenda," he said.