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House fails to override Biden veto upholding ESG rule

ESG investing has come under increasing scrutiny in the wake of the collapse of Silicon Valley Bank, which had heavily invested in climate related causes.

Published: March 23, 2023 6:47pm

The House of Representatives failed on Thursday to override President Joe Biden's veto of a measure halting a Department of Labor rule permitting a controversial investing practice.

Biden issued the first veto of his presidency on Monday, to protect the administrative rule allowing environmental, social, and governance (ESG)-based investing. The practice involves asset managers considering such factors when making investments independent of their financial merits. Republicans have questioned whether ESG investing by a firm conflicts with its fiduciary duty to its investors.

The Thursday House vote saw lower chamber lawmakers vote 219-200 in favor of overriding Biden, but they fell short of the two-thirds majority necessary to overturn the veto, according to The Hill. An override would have required the support of two-thirds of the Senate as well.

ESG investing has come under increasing scrutiny in the wake of the collapse of Silicon Valley Bank, which had heavily invested in climate related causes.

Earlier this week, a group of Republican attorneys general warned the Biden administration against the continued use of federal regulation to push his administration's climate agenda, asserting that such efforts had contributed to the fall of SVB.

"SVB’s failure is a warning sign that the administration’s environmental activism in its financial regulation not only ignores real financial risk but increases it. The administration should refocus regulation on true risk and stop pressuring financial institutions to meet impossible net-zero targets," Utah AG Sean Reyes said at the time.

"To put it bluntly, the administration’s zealotry in fighting climate change by unwisely—and illegally—attempting to convert federal financial regulators into environmental activists is inextricably intertwined with these bank failures and the fallout from them," the AGs wrote.

Ben Whedon is an editor and reporter for Just the News. Follow him on Twitter.

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