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.
About This Bill
Committee
Latest Action · June 21, 2023
Referred to the Committee on Financial Services, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
The Ensuring Sound Guidance Act would restrict investment advisers and pension fund managers from prioritizing environmental, social, and governance (ESG) factors over financial returns when making investment decisions. The bill requires that investment decisions be based primarily on "pecuniary factors"—those expected to affect financial risk or return—unless customers or plan participants explicitly provide written consent to consider non-financial factors. When non-financial factors are considered with consent, advisers must disclose expected and actual financial effects over a customer-selected period of up to three years. The Securities and Exchange Commission would have twelve months from enactment to issue implementing rules, with the requirements taking effect twelve months after that. The bill also directs the SEC to conduct studies on climate disclosures in the municipal bond market and the effectiveness of rules preventing payments to elected officials in exchange for municipal securities business, with reports due within twelve months.
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