To amend the Investment Advisers Act of 1940 and the Employee Retirement Income Security Act of 1974 to specify requirements concerning the consideration of pecuniary and non-pecuniary factors, and for other purposes.
About This Bill
Committee
Latest Action · July 12, 2023
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
The Ensuring Sound Guidance Act would restrict how investment advisers and pension plan managers consider non-financial factors when making investment decisions. Under the bill, investment advisers must base recommendations primarily on financial performance metrics, and pension fiduciaries must prioritize only financial factors unless customers or plan participants explicitly consent in writing to consider non-financial goals like environmental or social objectives. The Securities and Exchange Commission would have one year to write rules implementing these changes for investment advisers, with the rules taking effect one year after passage. The bill also directs the Comptroller General to study whether state and local pension plans are sacrificing financial returns for environmental, social, and governance objectives, and requires the SEC to conduct studies on climate change disclosures in municipal bonds and the effectiveness of rules preventing political payments in exchange for municipal securities business. All studies must be completed and reported to Congress within one year of the law's enactment.
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