U.S. President Biden has vetoed a resolution to overturn the Congressional Review Act (CRA) bill that had sought to overturn a Department of Labor (DOL) rule which allows retirement plan fiduciaries to consider ESG risks in decision making.

In a March 20 message to the House of Representatives, Biden declared his support for the DOL’s existing rule that allows, but does not require, retirement plan fiduciaries to consider ESG factors when making investment and proxy voting decisions.

“There is extensive evidence showing that [ESG] factors can have a material impact on markets, industries, and businesses,” Biden said. “But the Republican-led resolution would force retirement managers to ignore these relevant risk factors [and would] prevent retirement plan fiduciaries from taking into account factors such as the physical risks of climate change and poor corporate governance, that could affect investment returns.”

As You Sow CEO Andrew Behar praised the decision, stating that the veto “demonstrates that common sense and free markets are [Biden’s] top priority.”

The move was also commended by shareholder advocacy group, the Interfaith Center on Corporate Responsibility (ICCR). “Many environmental and social factors such as climate change and the way that companies treat their workers present systemic risks that will have long-term economic impacts on companies, investment portfolios, and society more broadly,” Josh Zinner, CEO of ICCR told Insightia. “In voting to restrict pension funds from considering a broad range of investment risks Congress is endorsing a dereliction of fiduciary duty to the detriment of American workers.”