President Joe Biden used his first veto to preserve a recent U.S. Department of Labor rule about investment choice in 401(k) and other workplace retirement plans.
The regulation, which took effect in January, applies to so-called "environmental, social and governance" funds.
These ESG investments — also known as sustainable or impact funds — come in a variety of flavors. Fund managers might funnel money into green-energy firms or companies with diverse corporate boards, for example.
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The Biden administration rule unwound a regulation issued by the Trump administration, which effectively barred employers from selecting ESG funds for their company 401(k) plans, experts said.
«The simplest way to describe [the Biden rule]: It took a Trump-era rule that said 'You shall not have ESG' and said 'You may have ESG,'» said Will Hansen, chief government affairs officer at the American Retirement Association and executive director of the Plan Sponsor Council of America, a trade group for employers.
Biden's veto on Monday preserves his administration's stance.
It doesn't appear there are enough congressional votes to override the veto. Doing so would require a two-thirds vote in both the House and Senate.
ESG has grown more popular in recent years, occurring against the backdrop of growing political backlash, largely from Republican lawmakers who deride it as «woke» investing.
Investors poured about $69 billion into the funds in 2021, an annual record and about triple the amount in 2019, according to Morningstar. However, inflows
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