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Biden uses the right of veto for the first time in his presidency


The President of the United States blocks a Republican resolution that wanted environmental, social and governance criteria to not be used in the management of pension plans

"I have a pen that can veto."

When the Democrats lost control of the House of Representatives, the President of the United States already made it clear that he would not jump through the hoop of laws that he did not share.

With the Senate relatively controlled, Joe Biden had not needed to use the veto pen until now, but this Monday it was released.

The vetoed matter does not have to do with taxes, firearms, social security, abortion, immigration or another of the great issues that dominates US politics, but with sustainable investment criteria, known as ESG ( initials in English for environment, social and governance).

The Republicans have declared war on sustainable investing and made it the battleground of the culture war.

Many of them consider that it is a way of imposing the progressive agenda through the back door on issues such as the fight against climate change or equal rights.

Therefore, with their majority in the House of Representatives and with the help of some dissident Democrat in the Senate, they voted a resolution so that pension fund managers could not take into account ESG criteria when making decisions about their investments, such as allows a rule issued by the Department of Labor that the opposition wanted to repeal.

It was a dispute more theoretical than practical.

The norm that the republicans wanted to annul does not force to take into account the criteria of sustainability, but simply allows to do it.

On the other hand, when allocating assets, managers must be guided by the benefit of the participants, but no one asks them to account for their decisions.

If they believe that companies that respect sustainability criteria have a better future, they can invest in them.

So even if the Labor Department rule had been struck down, the practical effect would have been little.

Biden has returned to Congress without his approval the resolution that he had been sent to sign.

In the American system of checks and balances, the president can refuse to sign a law or minor resolution (as in this case) passed by Congress.

The president says the rule that Republicans wanted to repeal "protects the life savings and hard-earned pensions of tens of millions of workers and retirees across the country."

“It enables retirement plan trustees to make fully informed investment decisions by taking into account all relevant factors that may affect a potential investment, while ensuring that investment decisions made by retirement plan trustees maximize the financial returns for retirees”, he points out in his message to the House of Representatives in which he expresses his veto.

Republicans argue that ESG criteria are

woke capitalism,

as they derogatorily call it, referring to those who have allegedly woken up


to injustices and social problems and are preparing to combat them.

They have declared war on the


, so they have put sustainable investment on the trigger.

His accusation is that the profitability of the participants is being sacrificed in order to impose other points on the progressive agenda.

Biden counterattacks on this ground: he answers that there is plenty of evidence showing that environmental, social and governance factors can have a significant impact on markets, sectors and companies.

“The Republican-led resolution would force retirement plan managers to ignore these relevant risk factors, disregarding free market principles and jeopardizing the life savings of working families and retirees.

In fact, this resolution would prevent retirement plan trustees from taking into account factors, such as the physical risks of climate change and poor corporate governance, that could affect the profitability of investments, ”says in his message the president, who he believes that it should be possible to "take into account any factor that maximizes the financial return of retirees across the country."

“This is not controversial, it is common sense,” he concludes.

Biden has stopped the coup when it comes to pension plans, but the battle continues on other fronts.

More than a dozen red states are promoting


laws that prevent public funds from being managed with these criteria or from awarding bids to companies that apply them in a way they deem discriminatory.

Texas, for example, intends to defend its powerful hydrocarbon sector with this.

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Source: elparis

All business articles on 2023-03-20

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