Few would have predicted at the beginning of the Biden administration that a relatively niche issue from the world of finance would be the subject of the President’s first veto. Yet, on Monday, President Biden flexed his executive muscles by striking down a resolution to remove Department of Labor guidance that allows investment managers to consider issues such as climate change-related risks in their investment decisions—a bill that achieved majority support in the House and the Senate earlier this month.
ESG (that is, Environmental, Social, and Governance) investing may perhaps be better understood as “responsible investment.” It’s the school of thought which holds that issues related to those three areas have material impacts on the performance of investments. Its application encompasses institutional money around the world, including millions of Americans’ 401k savings, to the tune of hundreds of trillions of dollars.
