Senate Minority Leader Mitch McConnell on Tuesday ripped into a new rule from the Biden administration that lets 401(k) fund managers consider climate change and social justice politics when investing clients’ retirement savings.
The Kentucky Republican accused the Labor Department’s provision allowing fiduciaries to engage in environmental, social and corporate governance investing, or ESG, as a dereliction of their duty to seek the best financial returns possible.
“The Biden administration is trying to enact a radical new regulation that would help liberals use their very own retirement savings as financial muscle for political causes they may not even support,” Mr. McConnell said on the chamber floor. “Democrats want to let money managers make these unrelated ideological goals a higher priority than getting their clients, ordinary American workers, the best returns for their own retirements.”
His criticism came as Republicans on Capitol Hill hope to force President Biden to issue his first veto by passing a privileged measure to scuttle the new ESG rule. The Republican-controlled House will pass the measure, known as a Congressional Review Act, Tuesday.
The resolution cannot be filibustered in the Senate, which means it needs only a simple majority to pass. It’s unclear when Senate Majority Leader Charles E. Schumer, New York Democrat, will hold a vote, but Republicans could pass the measure even in the Democratic-led chamber.
Sen. Joe Manchin III, West Virginia Democrat, is supporting the resolution with all 49 Senate Republicans. One more Democrat must break ranks for it to pass, unless Democratic Sen. Jon Fetterman of Pennsylvania, who is undergoing treatment for depression, is absent to vote.
The White House has already issued a veto threat and noted that the rule “is not a mandate — it does not require any fiduciary to make investment decisions based solely on ESG factors.”
Still, Republicans have their sights set on batting down the ESG provision as part of a broader war against the woke investment practice.
“When you put ideology ahead of seeking the highest returns, the returns — of course — suffer,” Mr. McConnell said. “In effect, we’re talking about letting financial companies garnish the retirement savings of workers without their permission in order to pursue unrelated liberal political goals.”