Nineteen Republican governors signed a letter on March 16, 2023, calling for state-level action to oppose the consideration of environmental, social, and corporate governance (ESG) factors in the investment-related decisions of state pension plans. The letter aimed to respond to President Joe Biden’s (D) stated intent to veto a Congressional Review Act (CRA) resolution that sought to block the U.S. Department of Labor (DOL) from implementing a rule permitting ESG considerations in certain retirement plans.
President Biden on Feb. 27 released a statement confirming his intent to veto the CRA resolution if it passed Congress. The U.S. House of Representatives passed the resolution the next day by a 216-204 vote. The U.S. Senate followed suit on March 1 by a 50-46 vote. In response to Biden’s threat to veto the resolution passed by Congress, the governors signed the letter in support of state-level action, arguing in part, “We as freedom loving states can work together and leverage our state pension funds to force change in how major asset managers invest the money of hardworking Americans, ensuring corporations are focused on maximizing shareholder value, rather than the proliferation of woke ideology.”
President Biden went on to veto the CRA resolution on March 21, arguing, “There is extensive evidence showing that environmental, social, and governance factors can have a material impact on markets, industries, and businesses. … Retirement plan fiduciaries should be able to consider any factor that maximizes financial returns for retirees across the country.”