A group of House Democrats has reintroduced a bill “to protect and increase sustainable investments.”
Reps. Andy Levin (MI), a member of the House Education & Labor Committee and member of the Subcommittee on Health, Employment, Labor, and Pensions; Brendan Boyle (PA), a member of the House Ways & Means Committee; Cindy Axne (IA), a member of the House Financial Services Committee; and Jesús “Chuy” García (IL), a member of the House Financial Services Committee, reintroduced the Sustainable Investment Policies Act and the Retirees Sustainable Investment Opportunities Act.
The legislation was introduced at the end of the last congressional term. The sponsors say that the two pieces of legislation would “give workers a bigger say in where they invest their retirement savings by requiring large asset managers and plan investors and fiduciaries to take into account and explain to beneficiaries how they consider environmental, social and corporate governance (ESG) factors when making investment decisions.”
According to a press release, the Sustainable Investment Policies Act would amend the Investment Advisers Act to promote transparency and disclosure by having large-asset investment advisors file a Sustainable Investment Policy (SIP) with the Securities and Exchange Commission. The SIP must describe the factors advisors consider when making investment decisions. These factors must align with an ESG framework. The ESG framework that investment advisers must consider includes, but is not limited to, the following investment considerations:
- Corporate political spending and decision-making
- Worker and collective bargaining rights
- Climate and other environmental risks
- Global human rights and diversity and inclusion practices
- The plan’s engagement with entities into which it invests, including proxy voting practices
The Retirees Sustainable Investment Opportunities Act empowers ERISA-regulated plans to adopt a Sustainable Investment Policy (SIP) that explains how the plan’s investments will address considerations like job creation, worker pay and benefits, human rights, climate change, and more. The bill also affirms that ERISA plans may invest plan assets in sustainable investments so long as it is in the plan beneficiary’s best financial interest. The investment must also not compromise anticipated risk-adjusted returns.
