Republican lawmakers have introduced another joint resolution to nullify the Department of Labor's new rule permitting retirement plan fiduciaries to consider climate change and other environmental, social and governance factors when selecting investments and exercising shareholder rights.
The joint resolution, introduced Thursday by Sen. Mike Braun, R-Ind., and Rep. Andy Barr, R-Ky., said Congress "disapproves" of the Labor Department rule and "such rule shall have no force or effect."
The resolution will not be enacted with Democrats in control of Congress and the White House, but it further demonstrates Republicans' animosity to the latest Labor Department rule-making.
Sen. Tom Cotton, R-Ark., introduced an identical resolution earlier this month.
Republicans will control the House next year and will likely ramp up oversight over the department, especially when it comes to ESG matters.
The Labor Department on Nov. 22 finalized its Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights rule. The rule, which will go into effect Jan. 30, is a reversal of two rules promulgated late in the Trump administration that said retirement plan fiduciaries could not invest in "non-pecuniary" vehicles that sacrifice investment returns or take on additional risk and outlined a process a fiduciary must undertake when making decisions on casting a proxy vote.
While the new rule allows ERISA fiduciaries to consider ESG factors, it also maintains the department's position that fiduciaries may not sacrifice investment returns or assume greater investment risks as a means of promoting collateral social policy goals.
Stakeholders said the rule is more neutral than the Trump-era rules, which were viewed as anti-ESG, and the proposal on which it was based, which was seen as pro-ESG.
But Mr. Barr said in a news release that the resolution is needed to protect investors. "By finalizing rule-making allowing plan fiduciaries to consider ESG factors, Biden's Department of Labor is not only steering capital away from the American energy sector and driving up prices at the pump, but is also threatening the returns and financial security of unwitting federal employees whose retirement funds will likely be invested in higher fee, less diversified, and lower performing ESG-tethered instruments in the name of woke politics," he said.
A Labor Department spokesman did not immediately respond to requests for comment.
In the Senate, the resolution's co-sponsors are Messrs. Bill Hagerty, R-Tenn.; James Lankford, R-Okla.; Richard Burr, R-N.C.; and John Kennedy, R-La. In the House, the co-sponsors are Messrs. Rick W. Allen, R-Ga., Bill Huizenga, R-Mich., Gregory F. Murphy, R-N.C., Bryan Steil, R-Wisc., French Hill, R-Ark., and Brad Finstad, R-Minn.
