The Congressional Sustainable Investment Caucus has endorsed the Freedom to Invest in a Sustainable Future Act, legislation that would give workplace retirement plans the freedom to consider environmental, social, and governance (ESG) factors in their investment decisions or offer ESG investment options. The bill was recently introduced by Representatives Suzan DelBene (WA-01), Sean Casten (IL-06), Juan Vargas (CA-52), and Dean Phillips (MN-03).
“Climate risk is financial risk,” said Rep. Sean Casten, co-chair of CSIC. “Retirement plan fiduciaries should be free to consider climate change and other ESG factors without regulatory barriers or the threat of litigation. I’m proud to support this legislation from Rep. DelBene that gives workers the option to invest in the best plans for their future.”
As co-chair of the Congressional Sustainable Investment Caucus, I’m proud to introduce this legislation with @RepDelBene that will give retirement plan fiduciaries the freedom to consider ESG factors and invest in the best plans for their future. https://t.co/6diMaHSHeU
— Rep. Sean Casten (@RepCasten) February 23, 2023
“It’s essential for Congress to ensure that sustainable investment options are accessible to workers across America,” said Rep. Juan Vargas, co-chair of CSIC. “With research showing that 80% of investors plan to consider environmental, social and governance (ESG) factors in their investment strategies, Representative Suzan DelBene’s bill is not only the right thing to do – but it’s the financially smart thing to do. This critical piece of legislation ensures that workplace retirement plans can consider material ESG risk factors and maximize financial returns for plan beneficiaries.”
Relatively few workplace retirement plans, such as pensions and 401(k) plans, take into consideration sustainable investing principles in their investment decisions, despite the high demand for sustainable investment options and the desires of many employees and retirees for such plans.
Uncertain and frequently shifting legal environments are among the main obstacles to increasing ESG investing options. The Trump administration imposed prohibitive restrictions on the consideration of ESG factors by retirement plans. Last year, the Biden administration removed and replaced that rule, restoring the ability for plans to make sustainable investments. However, the new regulation is currently subject to a legal challenge and is the target of Republican efforts to overturn it.
The Freedom to Invest in a Sustainable Future Act would eliminate this uncertainty, providing retirement plans the freedom to decide whether to include ESG issues in their investment decisions or to provide ESG investment options to plan participants.
The text of the Freedom to Invest in a Sustainable Future Act can be found here.
Source: Congressional Sustainable Investment Caucus
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