ESG Act of 2025
Sponsored By: Representative Barr
Introduced
Summary
This bill would make best interest based on pecuniary factors the default standard for advisers and brokers. It would also require SEC studies of climate and other environmental disclosures in the municipal bond market and of rules governing solicitation of municipal securities business.
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- Retail investors would see advice centered on financial outcomes unless they give informed written consent to consider non-pecuniary goals. If a customer consents, firms would have to disclose expected pecuniary effects over a customer-selected period not to exceed three years and then report the actual pecuniary effects versus a reasonably comparable index, including all fees and costs.
- Brokers, dealers, and investment advisers would be required to prioritize pecuniary factors as defined by expected material effects on risk or return. The SEC would have to revise or issue rules within 12 months and the rule changes would apply to actions beginning 12 months after enactment.
- The SEC would conduct two separate one-year studies and reports. One would examine how often municipal issuers disclose climate and environmental risks and whether investors consider those disclosures. The other would assess the effectiveness of MSRB Rule G-38 and SEC Rule 206(4)-5 in preventing improper payments, enforcement patterns, and impacts on small, minority, and women-owned firms, and would recommend regulatory or legislative steps.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 0 benefits, 0 costs, 1 mixed.
Investment advice must prioritize financial returns
If enacted, brokers and investment advisers would have to judge your best interest using money-related factors. They could consider social or environmental goals only if you give informed written consent. If you consent, they would show expected money effects over a period you choose, up to 3 years, then compare actual results to a similar index you select and show all fees and costs. The SEC would set rules within 12 months, and the new standard would start 12 months after enactment.
Sponsors & CoSponsors
Sponsor
Barr
KY • R
Cosponsors
Rep. Huizenga, Bill [R-MI-4]
MI • R
Sponsored 3/26/2025
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov