Congress passed a resolution on Wednesday that will prevent the Department of Labor from requiring retirement plans to make climate and social-related investments, setting the stage for President Joe Biden’s first veto.

The GOP-led bill, H.J. Res. 30, cleared the Senate in a 50-46 vote by using the Congressional Review Act that bypasses the 60-vote requirement. All Republicans and two Democrats — Sen. Jon Tester, D-Mont., and Sen. Joe Manchin, D-W.Va. — voted in favor. Biden said he will veto the bill.

Proponents of the resolution have deemed environmental, social and corporate governance investments — or “ESG” — as “woke” policies that push businesses to support a progressive agenda.

“The Biden administration wants retirement plan managers to invest people’s retirement funds based not on the best return for the money — nope — based on woke ideology,” said Sen. John Barrasso, R-Wyo., on Wednesday, per The New York Times.

Opinion: The bipartisan argument for ESG

Democratic Sens. Manchin and Tester support the bill

Manchin, who took the Senate floor on Wednesday, said ESG investments pose a threat to the retirement systems as the Biden administration prioritizes a “liberal policy agenda over protecting and growing the retirement accounts of 150 million Americans.”

He cited the importance of fossil fuels for the U.S. to remain a superpower in the current geopolitical atmosphere and pointed to the energy crisis in Ukraine and the European Union as a product of disinvestment.

Manchin in a statement argued that “this rule replaces a previous rule which mandated fiduciary decisions be made solely on getting the best returns.”

It's worth noting that the Department of Labor’s current rule doesn’t mandate ESG investments, but rather allows managers to take ESG factors into account when making investment decisions, in addition to considerations about risk and returns.

Meanwhile, Tester in a statement noted that at a time of high inflation, “we need to be focused on ensuring Montanans’ retirement savings are on the strongest footing possible.”

Both Manchin and Tester face reelection next year in states that are major fossil fuel producers, and where Biden lost to former President Donald Trump in the 2020 election.

How did the ESG rule come about?

The ESG rule has been through a few revisions. In 2020, the Trump administration proposed a change to the Employee Retirement Income Security Act of 1974, which oversees pension and 401(K) plans, to prioritize economic interests instead of ESG investments, according to The Washington Post.

“Private employer-sponsored retirement plans aren’t vehicles for furthering social goals or policy objectives that aren’t in the financial interest of the plan,” said Eugene Scalia, the secretary of labor during the Trump administration, per the report.

But the Biden-Harris administration's rule allows for other factors like “corporate accountability and transparency, climate, and liability risks” to be considered, as the White House stated in a press release.

Will Biden veto Senate passed ESG rule?

The executive branch also said that if the rule were to be reversed, it would allow the federal government to interfere “with the market in a manner that stands in the way of retirement plan fiduciaries’ ability to protect these hard-earned retirement savings and pensions and unnecessarily limit the options available to retirement plan participants and investors.”

Since the proposal already cleared the Republican-controlled House, it will now head to Biden’s desk. The White House said that the president will veto the bill.