House Republicans Advance Anti-ESG Legislation

Republicans on the House Financial Services Committee approved four anti- environmental/social/governance (ESG) bills this past July, and on September 5, GOP members of the House Education & the Workforce Committee introduced another four bills that would restrict the use of ESG factors in evaluating investments in a retirement savings plan.

In July, the Financial Services Committee voted 29 to 21 to approve four bills that restrict the use of ESG factors in what they call an attempt to “protect retail investors from having environmental and social goals impact their returns.” The four approved bills, which focus on investment issues and savers generally, include:

• R.4790, offered by Rep. Bill Huizenga (R-MI) that, would limit the kinds of disclosures that could be compelled by the Securities and Exchange Commission (SEC).
• R.4655, introduced by Rep. Ralph Norman (R-SC), that would restrict the SEC’s authority to regulate shareholder proposals.
• R.4767, authored by Rep. Bryan Steil (R-WI), that would overhaul the proxy voting process.
• R.4823, introduced by Rep. Barry Loudermilk (R-GA), that would require bank regulators to report to Congress on meetings with international organizations on climate-related financial risk.

The bills introduced by GOP Members of the House Education & the Workforce Committee focus on the use of ESG factors in choosing investment options in a retirement plan. They all amend ERISA. “Our bills are focused on rolling back (President) Biden’s destructive ESG rule and protecting the financial future of working Americans, retirees, and their families,” said the four lawmakers who introduced the package of bills. The four bills are:

• R.5339, the “RETIRE Act,” introduced by Rep. Rick Allen (R-GA), would require plan fiduciaries to base their decisions only on economic factors.
• R.5337 would limit proxy votes for shareholders in retirement plans to be based only on economic factors. The Retirement Proxy Protection Act was introduced by Rep. Erin Houchin (R-IN).
• R.5338, authored by Rep. Bob Good (R-VA), the “No Discrimination in My Benefits Act,” would prohibit use of race, color, religion, sex, or nationality in selecting fiduciary services.
• R.5340, the “Providing Complete Information to Retirement Investors Act,” would “mandate a notice to investors of the risks of self-selecting investment products as opposed to going through a fiduciary.” The bill was written by Rep. Jim Banks (R-IN).

These four bills were approved by the Education and the Workforce Committee yesterday.

The use of ESG factors in investment decision-making has become a hotly controversial partisan issue. Earlier this year, Congress tried and failed to override a Biden veto of an anti-ESG bill that would have overturned the Department of Labor’s (DOL’s) rule allowing retirement plan fiduciaries to use, with limitations, ESG factors in choosing the investments offered in their retirement plans to the plan’s participants.

Prospects: Given the lack of time, competing higher-priority agenda items (e.g., funding the government), and intense partisan nature of the issue, it seems unlikely that either the Financial Services or the Education & the Workforce bills will be enacted into law this year. But action on any or all of these bills could occur next year, especially in the House.

NAIFA Staff Contacts: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org.