Sustainable Investment Policies Act of 2021
This bill requires investment advisers to establish and follow a sustainable investment policy, including policies relating to the corporate governance practices, labor and human rights practices, and the environmental risks of the entities receiving investments.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3605 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 3605
To amend the Investment Advisers Act of 1940 to enable consideration
and promote disclosure and transparency of sustainable investment
policies by large asset managers, and for other purposes.
_______________________________________________________________________
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 Financial Services
_______________________________________________________________________
A BILL
To amend the Investment Advisers Act of 1940 to enable consideration
and promote disclosure and transparency of sustainable investment
policies by large asset managers, and for other purposes.
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 ``Sustainable Investment Policies Act
of 2021''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Environmental, social, and governance (in this Act
referred to as ``ESG'') include the potential for economic
benefits, such as local job creation and economic development,
in addition to investment returns, as provided by investments
sometimes referred to as ``Economically Targeted Investments''
or ``ETIs''.
(2) There is now incontrovertible evidence that ESG factors
can have substantial effects on investment performance and are
important to many investors and that investors have a
significant interest in such findings.
(3) Investor findings show a dramatic interest in
investments that consider ESG factors.
(4) Decades of policy interpretations from the Department
of Labor and the Securities and Exchange Commission have
created confusion as to the obligations of a fiduciary with
regard to ESG intergration.
(5) Recent policies of the Securities and Exchange
Commission have had a chilling effect on ESG integration and
active ownership with a view toward advancing a sustainable
economy.
SEC. 3. SUSTAINABLE INVESTMENT POLICY OF INVESTMENT ADVISERS.
Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3) is amended by adding at the end the following new subsection:
``(o) Sustainable Investment Policy.--
``(1) In general.--No person may be registered as an
investment adviser under this section unless such person--
``(A) files a sustainable investment policy with
the Commission; and
``(B) complies with such policy in carrying out the
duties of an investment adviser.
``(2) Contents.--A sustainable investment policy described
under paragraph (1)(A) shall include the policies of the person
with respect to the following:
``(A) Environmental concerns, including
environmental risks to the assets and properties of
entities in which the funds invest, including--
``(i) climate risks and contributions;
``(ii) associated environmental risks,
including--
``(I) industrial pollution;
``(II) habitat destruction;
``(III) deforestation; and
``(IV) other forms of environmental
degradation; and
``(iii) pollution of land, air, or water
related to the operation of the entities in
which fund invests.
``(B) Social considerations, including--
``(i) characteristics of workforces
employed by entities in which the fund invests,
including--
``(I) compensation and benefits;
``(II) health and safety;
``(III) diversity and demographics;
``(IV) skills and training;
``(V) retention and turnover;
``(VI) full-time and part-time
employment; and
``(VII) the use of independent
contractors;
``(ii) labor and human rights compliance by
entities in which the fund invests, including--
``(I) workers' freedom of
association;
``(II) the right to collectively
bargain; and
``(III) the prevention of
employment discrimination, child labor,
and forced labor in the operations and
supply chains of the entity;
``(iii) the implementation of practices
which enhance diversity and inclusion
performance within the workforce, senior
leadership, business procurement, philanthropy,
and the board of directors;
``(iv) due diligence and practices
regarding supply chain management, including--
``(I) environmental considerations;
``(II) human rights; and
``(III) workers' compensation
considerations; and
``(v) the potential for achieving economic
benefits in addition to investment returns.
``(C) Governance considerations, including--
``(i) corporate governance practices by
entities in which the fund invests; and
``(ii) tax practices of entities in which
the fund invests, including international tax
avoidance strategies and tax payment
disclosure.
``(D) Other relevant economically targeted
investment, or environmental, social, and governance
considerations and factors.
``(3) Compliance audit.--
``(A) In general.--Not less than annually, each
registered investment adviser shall contract with an
auditor to perform an audit of the adviser's compliance
with the sustainable investment policy filed with the
Commission.
``(B) Report.--An auditor performing an evaluation
under subparagraph (A) shall file, and make publicly
available, a report on such evaluation to the adviser
and the Commission.
``(C) Fiduciary safe harbor.--The Commission may,
by order, determine that an investment adviser has not
breached its fiduciary duty with respect to
consideration of factors outlined under this subsection
if the investment adviser is in compliance with this
subsection.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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