On Monday, 3/20, President Biden issued his first veto – and the topic? ESG investing!
The vetoed Republican-led measure would have effectively reinstated Trump-era guidance on retirement plan fiduciaries considering factors such as climate change and other environmental, social and governance factors, when picking investments. Proponents could try to override Biden’s veto, but at this point it seems unlikely that they could get the 2/3 majority needed in both chambers to do so. (Biden issues his first veto on retirement investment resolution | CNN Politics)
Does this mean that ESG investing is now risk free? No! Nor are fiduciaries required to make investment decisions based solely on ESG factors.
ESG investing carries certain risks and duties, and should be discussed with ERISA counsel, particularly as a hot political issue and ripe for participant litigation.
See also our longer article on ESG investing (link below), which reviews how ESG rules have changed over time, plan fiduciary considerations, and plan best practices.
ERLJ_Spring21_Bokert-Hahn.pdf