Senate Proposals to Roll Back ESG Investing and Require Notice for Brokerage Windows Under ERISA Introduced

Senator Bill Cassidy (R-LA) has reintroduced S. 3086, the Restoring Integrity in Fiduciary Duty Act. According to a press release, fiduciaries would be limited to consider only financial factors of an investment when making decisions about investment options. The bill also reaffirms that ERISA’s fiduciary duties of prudence and loyalty include the exercise of shareholder rights and proxy voting. The bill is in response to a 2022 rule by the Department of Labor providing for the consideration of environmental, social and governance factors when evaluating risks and returns and the selection of investments. 

Senator Jim Banks (R-IN) has introduced S. 3083, the Providing Complete Information to Retirement Investors Act. Under this proposal, ERISA would require notices to plan participants each time they allocate money in or out of a brokerage window (i.e., self-directed investments not selected by a fiduciary) and may result in lower returns. The difference between choosing investments selected by ERISA fiduciaries and those self-selected through a brokerage window must also be explained to plan participants. Senator Banks introduced a similar bill in the House of Representatives in the last term of Congress, where it passed the House.