Congress recently adopted a joint resolution to overturn a final rule issued by the U.S. Department of Labor (DOL) in November 2022 that provides guidance for private sector retirement plans to consider the effect of environmental, social and corporate governance (ESG) factors on an investment, or when exercising shareholder rights when selecting investments.
The final rule became effective on Jan. 30, 2023, and does not require plan administrators to consider ESG factors when selecting investments — rather it eases restrictions on fiduciaries considering such ESG factors. The final rule followed two executive orders from President Joe Biden’s administration that required the DOL to “suspend, revise, or rescind” ESG regulations promulgated under former President Donald Trump.
Congress utilized the Congressional Review Act when adopting the joint resolution, which allows Congress to disapprove a final rule issued by a federal agency within 60 legislative days of it going into effect via a simple majority in both chambers.
Biden has indicated that he intends to veto the joint resolution and retain the DOL’s ESG rule. This would be Biden’s first veto.
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