A group of House Democrats reintroduced two bills that would require retirement plan fiduciaries and investment advisers to take into account and explain how they consider environmental, social and governance factors when making investment decisions.
The Sustainable Investment Policies Act, which would amend the Investment Advisers Act, and the Retirees Sustainable Investment Policies Act, which would amend the Employee Retirement Income Security Act, stipulate that investment advisers and retirement plan fiduciaries must establish a sustainable investing policy that factors in considerations like corporate governance practices, diversity and inclusion practices, labor and human rights compliance, and environmental risks.
The Retirees Sustainable Investment Policies Act 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, according to a news release.
Reps. Andy Levin, D-Mich., Brendan Boyle, D-Pa., Cindy Axne, D-Iowa, and Jesus "Chuy" Garcia, D-Ill., reintroduced the legislation Thursday.
The bills were originally introduced in December, late in the previous congressional session.
"Fortunately, sustainable investing and profitable investing are not mutually exclusive," Mr. Levin said in the news release. "Companies perform better if they are aimed at where the economy is going, which is towards sustainability with respect for human rights, labor rights, diversity, equity and inclusion. I'm excited to work with the Biden administration and Secretary of Labor Marty Walsh, a proponent of sustainable investing, to garner support for this crucial legislative effort."