The Senate voted to reject a Biden administration rule that allows retirement fund managers to make investment decisions based on woke abstractions like climate change, teeing up President Biden's first veto.
Republicans barely passed the anti-environmental, social, and corporate governance (ESG) measure with support from two Democrats, Jon Tester of Montana and Joe Manchin of West Virginia.
Biden vowed to veto the measure, saying his ESG agenda is about prioritizing American workers.
“The rule reflects what successful marketplace investors already know — there is an extensive body of evidence that environmental, social, and governance factors can have material impacts on certain markets, industries, and companies,” the White House added.
Republicans say Biden is prioritizing "wokeness" over maximizing investment returns for retirees.
"What's happened here is the woke and weaponized bureaucracy at the Department of Labor has come out with new regulations on retirement funds, and they want retirement funds to be invested in things that are consistent with their very liberal, left-wing agenda," Senator John Barrasso (Wy.) said.
Corporate America's embrace of wokeness has driven a rift between Republicans and their traditional allies in Wall Street, with ESG being a top target of criticism.
House Speaker Kevin McCarthy (R-Ca.) said Biden's rule lets Wall Street "use your retirement savings to fund left-wing political causes.” The House passed a version of the Senate's bill on Tuesday.
“The House blocked Biden’s woke ESG agenda. The Senate blocked Biden’s woke ESG agenda. Now it heads to the President’s desk. He must side with American workers and sign it immediately," he said.
But it's not just Republicans who are criticizing Biden's ideological focus. Manchin called Biden's rule "an example of how our Administration prioritizes a liberal policy agenda over protecting and growing the retirement accounts of 150 million Americans.”
Tester said Biden's rule "undermines retirement accounts for working Montanans and is wrong for my state.”
Machin and Tester are facing tough re-election battles in 2024 and are likely looking for ways to distinguish themselves from the radicalism of Biden and the national Democratic party.
Senate Majority Leader Chuck Schumer (D-Ny.) argued that Republicans were attempting to regulate the "free market" because the rule doesn't mandate ESG investing.
"This isn't about ideological preference, it's about looking at the biggest picture possible for investments to minimize risk and maximize returns," he said.