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Volume XIII, Number 158


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Does the Recent Attempt by Congressional GOP to Overturn Labor ESG Rule Portend Congressional Scrutiny of Progressive Corporate Policies?

On March 20, President Biden vetoed a Republican-led effort to overturn a Department of Labor rule on environmental, social, and governance (ESG) guidelines for retirement accounts. The Department of Labor rule will allow ERISA retirement plan managers to consider various ESG factors when making investment decisions, including corporate policies relating to climate change. Earlier in March, the Senate voted 50 to 46 to disapprove of the rule under the Congressional Review Act, with Senators Joe Manchin (D-WV) and Jon Tester (D-MT) joining Senate Republicans. Senate disapproval of the rule followed a largely party-line vote in the House of Representatives, with just one Democratic joining House Republicans. 

Generally deriding public and private sector ESG initiatives as antithetical to free market values and politically motivated, linking corporate ESG initiatives to progressive policy priorities, House and Senate Republicans lack support to override President Biden’s veto. However, Democratic defections to support the ESG resolution may embolden House and Senate Republicans to take additional congressional action on ESG initiatives, with a focus on oversight and investigations. House Republicans have, for example, already formed a Republican ESG working group to coordinate response to recent ESG proposals by private sector companies, led by Financial Services Oversight Subcommittee Chair Bill Huizenga (R-MI). The ESG working group builds on ongoing congressional scrutiny of private sector companies, including oversight of so-called “Big Tech” platforms and companies with ties to China and the Chinese Communist Party.

Whether the Republican ESG working group will serve as a bellwether for future House and Senate investigations and legislation on ESG initiatives or other corporate initiatives, including those relating to diversity, equity, and inclusion (DEI), climate change, human rights, etc., warrants attention. While the ESG working group is comprised of Republican Financial Services Committee members and led by a subcommittee chairman, the working group itself is informal. However, the establishment of the Republican ESG working group reflects a notable trend in Republican attitudes towards private industry—specifically, a willingness to criticize and oppose companies or industries whose corporate policies are unaligned with Republican economic or social priorities. As a result, these new areas of focus for the Republican ESG working group may foreshadow congressional scrutiny of private companies and their initiatives by the Financial Services Committee or House Republicans more generally.

© Copyright 2023 Squire Patton Boggs (US) LLPNational Law Review, Volume XIII, Number 82

About this Author

Pablo Carrillo Government Policies Attorney Squire Patton Boggs Law Firm
Of Counsel

Pablo E. Carrillo served as Chief of Staff to US Senator John McCain, Chair of the Senate Armed Services Committee and former US presidential candidate. He was responsible for the development and implementation of the Senator’s legislative and congressional oversight strategy.

Pablo also served as Minority General Counsel of the Senate Armed Services Committee, where he advised the Ranking Member and other Republican Senators on the defense authorization bill and the Minority’s oversight and investigative activities, as well as defense acquisition and contracting policy. He was the...

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Michael D. Hawthorne Attorney Public Policy Squire Patton Boggs

Michael Hawthorne is an associate in the Public Policy Practice, who draws upon his Capitol Hill and government investigations experience to advise clients on policy issues in several areas, including financial services, tax, and transportation and infrastructure.

Prior to joining the firm, Michael developed a strong background in public policy and congressional procedure, serving as a law clerk for the US House Committee on Ways and Means and US Senate Permanent Subcommittee on Investigations.

Michael graduated from...