Levin, Boyle, Axne, García Introduce Legislation to Promote Transparent, Sustainable ESG Investing
WASHINGTON, D.C. – Congressman Andy Levin (MI-09), member of the House Education & Labor Committee and member of the Subcommittee on Health, Employment, Labor, and Pensions, along with Congressman Brendan Boyle (PA-02), member of the House Ways and Means Committee, Congresswoman Cindy Axne (IA-03), member of the House Financial Services Committee, and Congressman Jesús “Chuy” García (IL-04), member of the House Financial Services Committee, today introduced two pieces of legislation to protect and increase sustainable investments. The Sustainable Investment Policies Act and the Retirees Sustainable Investment Opportunities Act together would give workers a bigger say in where they invest their retirement savings by requiring large asset managers and plan investors and fiduciaries to take into account and explain to beneficiaries how they consider environmental, social and corporate governance (ESG) factors when making investment decisions.
“These bills make it easier for Americans to understand if their money is being invested in accordance with their values. They bring transparency to the multi-trillion-dollar investment and pension management industries. They are vital for ensuring workers’ life savings are invested sustainably,” said Rep. Levin. “Fortunately, sustainable investing and profitable investing are not mutually exclusive. 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.”
“The Sustainable Investment Policies Act and the Retirees Sustainable Investment Opportunities Act are long overdue modifications to the rules surrounding sustainable investments that will provide clarity and transparency for investors and increase awareness about how their money is being invested,” said Rep. Boyle. “This legislation isn’t just good public relations, but is the viable, responsible, and profitable approach for America. ESG principles should be guiding financial decisions. When environmental advocates, corporate leaders and business analysts can all agree that social responsibility cannot coexist without financial responsibility, we need to not just listen to them, but to act to ensure a better future for our economy, our 401(k)s and our environment.”
“When my constituents save for retirement, they want to know that their investment is going to be focused where they want it – and that it will be there when they need it,” said Rep. Axne. “Companies that invest in their future will do better over the long run, and that’s why it’s important for us to support those who want to pursue sustainable investing. Investors should be able to understand how advisers are evaluating risks, and having this information will help ensure people can control what their savings is supporting.”
“Investors should know whether their money supports sustainable projects or causes negative impacts on communities like mine. This is especially important for the sponsors and administrators of retirement plans who need to anticipate what beneficiaries will need for decades to come.” said Rep. García. “These bills create new tools for investors and retirement plan holders to determine whether their money supports environmental sustainability, workers’ rights, and corporate governance best practices.”
“Having led the opposition in the U.S. House of Representatives to the US Department of Labor’s (DOL’s) proposed rule to obstruct investments that consider environmental, social, and governance (ESG) factors, as well as Economically-Targeted Investments (ETIs), U.S. Congressman Andy Levin and colleagues have introduced two versions of the Sustainable Investment Act for America. After a quarter century of policy whiplash since the original 1994 DOL ETI rule was introduced, we all need a legislative solution to guarantee that our pension funds and other assets take into account workers' wages, benefits, and protections; workers’ and human rights; and the fierce urgency of climate change. These two bills will enable or require retirement investors and fiduciaries to consider environmental, social, and governance (ESG) factors into account when making investments, and will, once and for all, empower workers’ assets to be invested in ETIs and in critical economic development, which aligns with the long-term interests of pension beneficiaries. The Heartland Network is proud to have supported Congressman Levin’s brave struggle to move forward our nation’s investment policy to where most of the world’s financial markets have already moved — toward a sustainable future,” said Tom Croft, Managing Director, Heartland Capital Strategies.
“For too long, our retirement funds and other investments have been used to prop up the destructive industries that drive climate change, habitat destruction and the erosion of human rights domestically and around the world. By requiring transparency from large asset managers and retirement plans around sustainability practices, these bills will go a long way towards putting trillions of dollars to work to advance an economy that meets peoples’ needs while building ecological integrity and resilience for the future,” said Jeff Conant, Senior International Forests Program Manager, Friends of the Earth.
“The incorporation of sustainable investment practices relies on a clear, supportive regulatory environment. Both the Sustainable Investment Policies Act and Retirees Sustainable Investment Opportunities Act help create that regulatory support by establishing sustainable investment as part of fiduciary duties. Across markets and around the world, we must empower workers and support investment managers to incorporate environmental, social and governance (ESG) issues into their retirement and investing decisions to fully consider associated risk and achieve sustainable, long-term value creation. We also welcome the addition of human rights considerations to the latest draft legislation, a growing priority for PRI and our nearly 4,000 signatories around the world,” said Fiona Reynolds, CEO of the UN-supported Principles for Responsible Investment (PRI).
The Sustainable Investment Policies Act amends the Investment Advisers Act to promote transparency and disclosure by having large asset investment advisors file a Sustainable Investment Policy (SIP) with the U.S. Securities and Exchange Commission (SEC). The SIP must describe the factors advisors consider when making investment decisions. These factors must align with an ESG framework. The ESG framework that investment advisers must consider includes, but is not limited to, the following investment considerations:
- Corporate political spending and decision-making;
- Worker and collective bargaining rights;
- Climate and other environmental risks;
- Global human rights and diversity and inclusion practices; and
- The plan’s engagement with entities into which it invests, including proxy voting practices.
The Retirees Sustainable Investment Opportunities Act empowers ERISA-regulated plans to adopt a Sustainable Investment Policy (SIP) that explains how the plan’s investments will address considerations like job creation, worker pay and benefits, human rights, climate change, and more. The bill 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.
The Sustainable Investment Policies Act is also supported by the Center for American Progress, Americans for Financial Reform and Public Citizen.
The Retirees Sustainable Investment Opportunities Act is also supported by US SIF: The Forum for Sustainable and Responsible Investment, the Center for American Progress and Public Citizen.