A group of seven Republican senators on Wednesday presented companion legislation that would block ERISA retirement plan fiduciaries and investment advisers from considering ESG factors in investment decisions.
The Ensuring Sound Guidance (ESG) Act, led by Sen. Tom Cotton, R-Ark., follows legislation originally introduced in the House by Reps. Andy Barr, R-Ky.,and Rick Allen, R-Ga. in June.
The bill would amend ERISA and the Investment Advisers Act of 1940 to require that plan fiduciaries and plan sponsors only consider "pecuniary factors" when making investment decisions, which GOP lawmakers said would maximize returns.
"Investment funds like BlackRock that millions of Americans trust with their hard-earned savings should prioritize investments that result in the highest returns — not fund ESG scams," Mr. Cotton said in a Wednesday news release. "My bill will make sure investment fund managers are making the best financial decisions on behalf of their clients."
Late last month, BlackRock CEO Larry Fink said he no longer uses the term ESG because the term has been "entirely weaponized" by both the "far left" and the "far right." The asset management firm has been the target of attacks from both sides of the political spectrum, who have accused Mr. Fink and his firm of being too "woke" for its ESG investing and, alternatively, not doing enough to divest from the fossil fuel industry.
In addition to blocking the consideration of ESG factors, the Republican-led bill directs the comptroller general and the SEC to conduct studies on the effects of ESG objectives and climate-related disclosure. This includes ESG's impact on underfunded state and local pension plans.
"Asset managers should be in the business of maximizing returns for investors, not pushing their own political agenda at the expense of everyday Americans," Mr. Barr said in the Wednesday news release. "Our proposed legislation safeguards the savings efforts of hardworking Americans."
The bill is co-sponsored by Sens. Mike Braun, R-Ind.; Ted Budd, R-N.C.; Kevin Cramer, R-N.D.; James Risch, R-Idaho; Marsha Blackburn, R-Tenn.; and Rick Scott, R-Fla.
