Move preserves freedom of retirement plans to account for material risks and returns
WASHINGTON – Today President Biden vetoed a resolution that would have repealed a U.S. Department of Labor (DOL) rule allowing retirement plans to consider environmental, social, and corporate governance (ESG) criteria and allowing retirement plan fiduciaries to vote on ESG-related shareholder resolutions.
By passing a joint resolution under the Congressional Review Act (CRA) on March 1, House and Senate Republicans, joined by a few Democrats, sought to nullify the DOL’s Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights rule allowing responsible investing.
In limiting the scope of what pension fund managers can take into account, the Congressional resolution would have tied investors’ hands -- and put pension funds at risk. The president’s veto maintains the ability of investors to consider any and all material risks and opportunities.
In response, Green America, which represents 250,000 individual consumers and investors and nearly 2,000 businesses and investment firms, applauds President Biden for vetoing the resolution.
“Decades of investment experience prove that taking environmental, social, and corporate governance criteria into account provides competitive returns by giving investors a greater understanding of risk and opportunity. In particular, the ability to consider climate impacts is a top concern for our members and supporters,” said Cathy Cowan Becker, Responsible Finance Campaign Director at Green America. “We thank President Biden for vetoing the Republican resolution that would have limited our freedom to invest, and for ensuring we can continue common-sense financial management.”
BACKGROUND
In preparing the rule, the DOL heard from thousands of stakeholders, including asset managers, labor organizations, corporate America, consumer groups, service providers, workers, investment advisers, and almost 7,000 members of Green America who signed our petition in support.
The rule allows, but does not compel, investors to consider ESG criteria in their decisions and shareholder votes, and confirms that fiduciaries may not sacrifice investment returns to promote social policy goals. The new rule restores the government’s neutral stance, requiring fiduciaries to use their best professional judgment to make investment decisions.
The freedom to consider the real-world risks of the climate crisis not only protects investments from loss, but also opens up opportunities for substantial growth. The ability to invest in the clean energy boom is a once-in-a-lifetime opportunity, and President Biden’s veto will help keep avenues clear for pensions, retirement funds, and state revenues to benefit.
ABOUT GREEN AMERICA
Green America is the nation’s leading green economy organization. Founded in 1982, Green America provides the economic strategies, organizing power and practical tools for businesses and individuals to solve today’s social and environmental problems. http://www.GreenAmerica.org
MEDIA CONTACT: Max Karlin for Green America, (703) 276-3255, or mkarlin@hastingsgroupmedia.com.
