Biden used first veto to save a 401(k) investment rule. Here’s what it does
Experts are unsure whether the Biden veto will lead to more ESG uptake by employers.
President Joe Biden used his first veto to preserve a recent U.S. Department of Labor rule about investment choice in 401(k) and other workplace retirement plans.
The regulation, which took effect in January, applies to so-called "environmental, social and governance" funds.
These ESG investments -- also known as sustainable or impact funds -- come in a variety of flavors. Fund managers might funnel money into green-energy firms or companies with diverse corporate boards, for example.
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The Biden administration rule unwound a regulation issued by the Trump administration, which effectively barred employers from selecting ESG funds for their company 401(k) plans, experts said.
"The simplest way to describe [the Biden rule]: It took a Trump-era rule that said 'You shall not have ESG' and said 'You may have ESG,'" said Will Hansen, chief government affairs officer at the American Retirement Association and executive director of the Plan Sponsor Council of America, a trade group for employers.
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