Last month the House approved a bill that bans the use of environmental, social, and governance (ESG) factors in selecting investment choices in retirement plans. HR2988, the Protecting Prudent Investment of Retirement Savings Act, would bar401(k) and pension fund managers from considering ESG factors in making investment decisions.

The213 205 House vote reflects the largely GOP position that employer-sponsored retirement plan fiduciaries should choose plan investment options based solely on financial considerations. In short, the bill restricts consideration of “non-pecuniary” factors like ESG. It also limits diversity, equity, and inclusion considerations and restricts the use of proxy voting on shareholder proposals.

Prospects: HR 2988 is a partisan bill reflecting a sharp difference in positions between most Republicans and Democrats. It is likely to stall in the Senate, if the Senate even brings it up for debate.

NAIFA Staff Contacts: Jayne Fitzgerald – Director –Government Relations, at jfitzgerald@naifa.org