Retirees Sustainable Investment Opportunities Act of 2021
This bill requires a retirement or employee benefit plan that is regulated under the Employee Retirement Income Security Act of 1974 to disclose whether it has adopted a sustainable investment policy. A sustainable investment policy must address considerations relating to corporate governance practices, labor and human rights practices, and the environmental risks posed by the entities receiving investments.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3604 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 3604
To amend the Employee Retirement Income Security Act of 1974 to enable
consideration and disclosure by retirement plans of Sustainable
Investment Policies.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 28, 2021
Mr. Levin of Michigan (for himself, Mrs. Axne, Mr. Brendan F. Boyle of
Pennsylvania, and Mr. Garcia of Illinois) introduced the following
bill; which was referred to the Committee on Education and Labor
_______________________________________________________________________
A BILL
To amend the Employee Retirement Income Security Act of 1974 to enable
consideration and disclosure by retirement plans of Sustainable
Investment Policies.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Retirees Sustainable Investment
Opportunities Act of 2021''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) There is now incontrovertible evidence that
environmental, social, and governance (hereinafter in this Act
referred to as ``ESG'') factors can have material and
substantial effects on investment performance.
(2) The United States Department of Labor which is
responsible for administering and enforcing the Employee
Retirement Security Act of 1974 has historically recognized
that retirement plans may make economically targeted
investments (``ETIs''), that is, investments that offer the
potential for economic benefits, such as local job creation,
community economic development, and affordable and workforce
housing construction, in addition to investment returns,
provided such investments otherwise comply with ERISA's
fiduciary requirements.
(3) ESG and ETI-related factors are referred to in this Act
as ``sustainability considerations'' and investments guided by
sustainability considerations are referred to as ``sustainable
investments.'' Sustainable investments have the potential to
contribute to the long-term well-being and resilience of
individuals and communities in this nation and around the world
while earning investment returns comparable to or better than
investments with similar risk that do not take these factors
into account.
(4) Sustainable investing is now among the fastest growing
segments of the investment industry with broad and growing
interest from both individual investors and institutional asset
managers. Nevertheless, sustainable investments are virtually
absent from ERISA-regulated retirement plans in the United
States.
(5) Retirement plans and participants in individual account
retirement plans should have the opportunity to make and hold
sustainable investments, provided ERISA's fiduciary
requirements are otherwise met.
(6) Accordingly, fiduciaries for retirement plans should--
(A) incorporate all relevant factors, including
sustainability-related factors, into investment
analysis and decision-making processes, consistent with
the investment time horizons of plan participants and
beneficiaries;
(B) be permitted to consider factors relevant to
sustainability, whether or not they can be demonstrated
to be financially material, provided doing so does not
diminish anticipated investment returns or increase
investment risk and is otherwise consistent with
ERISA's fiduciary requirements;
(C) encourage the adoption of best practices for
sustainability performance and sustainability impacts
in the companies or other entities in which they
invest;
(D) consider plan participants' and beneficiaries'
sustainability-related interests and preferences when
making investment decisions;
(E) consider the impact of plan investments on the
stability and resilience of the financial system and on
broad market returns as a result of the sustainability
characteristics of those investments;
(F) consider participation in shareholder
engagement and proxy activities, policy advocacy and
similar actions based on sustainability considerations;
and
(G) disclose how they have implemented these
commitments.
SEC. 3. PURPOSE.
The purpose of this Act is to enable retirement and welfare benefit
plans and participants in individual account retirement plans that are
covered by the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1001 et seq.), to make and hold sustainable investments,
consistent with the fiduciary standards, requirements, and procedures
of said Employee Retirement Income Security Act.
SEC. 4. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974.
(a) Disclosure of Sustainable Investment Policies.--Section 102 of
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1022)
(``ERISA'') is amended in subsection (b), by inserting ``a statement of
whether or not the plan has adopted a sustainable investment policy
pursuant to section 402(b)(5) of ERISA;'' after ``collective bargaining
agreement;''.
(b) Establishment of Sustainable Investment Policy.--Section 402 of
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1102) is
amended--
(1) in subsection (b)--
(A) in paragraph (3), by striking ``and'';
(B) in paragraph (4), by striking the period and
insert ``, and''; and
(C) by inserting after paragraph (4) the following:
``(5) adopt a sustainable investment policy of the plan in
accordance with subparagraph (d), provided a plan may elect not
do so if it gives notice to plan participants or beneficiaries
in writing of such election''; and
(2) by adding after subsection (c) the following:
``(d)(1) A sustainable investment policy under subsection (b)(5)
shall address sustainability considerations including, without
limitation, the following:
``(A) Economically targeted investment considerations
including, the potential for achieving economic benefits, such
as local job creation, community economic development, and
affordable and workforce housing construction, in addition to
investment returns.
``(B) Social considerations including--
``(i) characteristics of workforces employed by
entities in which the plan invests, including
compensation and benefits, health and safety, diversity
and demographics, skills and training, retention and
turnover, full-time and part-time employment, and the
use of independent contractors;
``(ii) labor and human rights compliance by
entities in which the plan invests, including workers'
freedom of association, the right to collectively
bargain, and the prevention of employment
discrimination, child labor, and forced labor in
company operations and supply chains;
``(iii) due diligence and practices regarding
supply chain management, including environmental, human
rights, and worker compensation considerations; and
``(iv) the implementation, to the extent
practicable, of practices which enhance diversity and
inclusion within the workforce, senior leadership,
business procurement, and philanthropy.
``(C) Environmental considerations including--
``(i) the potential to reduce and ultimately
eliminate net greenhouse gas emissions associated with
business activities and to mitigate exposure to
climate-related risks to the businesses, assets and
properties of entities invested in by the plan;
``(ii) the potential to mitigate other climate-
related and associated environmental harms and risks,
such as industrial pollution, habitat destruction,
deforestation, species endangerment and extinction, and
other forms of environmental degradation;
``(iii) the potential to address and rectify issues
of environmental justice and the inequitable
environmental impacts of certain business operations on
historically disadvantaged communities; and
``(iv) the potential to provide workers affected by
the shift to a low carbon economy with a just
transition by creating decent work and quality jobs.
``(D) Governance considerations including--
``(i) corporate governance practices by entities in
which the plan invests, including executive
compensation, board diversity, worker board
representation and codetermination, the independence of
board chairs, political spending and lobbying
disclosure; and
``(ii) tax practices of entities in which the plan
invests, including international tax avoidance
strategies and tax payment disclosure.
``(E) Other relevant economically targeted investment,
environmental, social, and governance considerations and
factors.
``(2) A plan shall be deemed to have adopted a sustainable
investment policy for the purposes of subsection (b)(5) if it
incorporates the sustainability considerations set forth in subsection
(d)(1) into a previously adopted investment policy of the plan or if
the plan elects to be governed by a sustainable investment policy
otherwise meeting the requirements of subsection (d)(1) adopted by a
third-party fiduciary to the plan.
``(3) A plan that has adopted a sustainable investment policy
pursuant to subsection (b)(5), including plans relying on subsection
(d)(2), shall conduct a review of such policy on an annual basis.''.
(c) Utilization of Certain Sustainability Considerations.--Section
404 of the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1104) is amended in subsection 404(a) by adding after subsection (2)
the following:
``(3) This subsection 404(a) shall not be construed to
prohibit a plan fiduciary from doing the following:
``(A) In choosing among investments with comparable
degrees of risk and rates of return, selecting one or
more such investments based on one or more
sustainability considerations as set forth in section
402(d)(1), regardless of whether such considerations
are determined to be financially material. For the
purposes hereof, the determination that investments
have comparable degrees of risk and anticipated rates
of return shall be a determination that a prudent man
acting in like capacity and familiar with such matters
could reasonably be expected to make on a forward-
looking basis.
``(B) Incorporating sustainability considerations
into the monitoring of or decisions regarding the
disposition of plan investments.
``(C) Exercising proxy voting rights in accordance
with the plan's proxy voting guidelines which may
include sustainability considerations.
``(D) Considering as financially material to
retirement benefits the potential for increased
contributions to the plan resulting from a plan
investment.''.
(d) Individual Account Plans.--Section 404 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1104) is amended in
subsection 404(c)(1) by adding after subsection (C) the following:
``(D) In selecting investment alternatives for
individual accounts, including investment alternatives
meeting the requirements of section 404(c)(5) of this
title, a plan fiduciary may include investment
alternatives selected in part on the basis of
sustainability considerations as set forth in section
402(d)(1) regardless of whether such considerations are
determined to be financially material, provided any
such alternative is determined to have a degree of risk
and anticipated rate of return comparable to other
investments of similar type determined by the fiduciary
to be available and appropriate for inclusion in the
plan. For the purposes hereof, the determination that
investments have comparable degrees of risk and rates
of return shall be a determination that a prudent man
acting in like capacity and familiar with such matters
could reasonably be expected to make on a forward-
looking basis.''.
(e) Establishment of Sustainable Investment Policy Technical
Assistance Program.--Not later than 90 days after the date of enactment
of this Act, the Assistant Secretary of Labor for Employee Benefits
shall establish a technical assistance program to provide educational
materials and technical assistance to plans to comply with the
amendments made by this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Education and Labor.
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