[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2358 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 2358
To amend the Investment Advisers Act of 1940 to specify requirements
concerning the consideration of pecuniary and non-pecuniary factors, to
require the Securities and Exchange Commission to conduct a study on
climate change and other environmental disclosures in the municipal
bond market, and to require the Securities and Exchange Commission to
conduct a study on the solicitation of municipal securities business.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 26, 2025
Mr. Barr (for himself and Mr. Huizenga) introduced the following bill;
which was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Investment Advisers Act of 1940 to specify requirements
concerning the consideration of pecuniary and non-pecuniary factors, to
require the Securities and Exchange Commission to conduct a study on
climate change and other environmental disclosures in the municipal
bond market, and to require the Securities and Exchange Commission to
conduct a study on the solicitation of municipal securities business.
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 ``Ensuring Sound Guidance Act of
2025'' or the ``ESG Act of 2025''.
SEC. 2. BEST INTEREST BASED ON PECUNIARY FACTORS.
(a) In General.--Section 211(g) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-11(g)) is amended by adding at the end the
following:
``(3) Best interest based on pecuniary factors.--
``(A) In general.--For purposes of paragraph (1),
the best interest of a customer shall be determined
using pecuniary factors, which may not be subordinated
to or limited by non-pecuniary factors, unless the
customer provides informed consent, in writing, that
such non-pecuniary factors be considered.
``(B) Disclosure of pecuniary factors.--If a
customer provides a broker, dealer, or investment
adviser with the informed consent to consider non-
pecuniary factors described under subparagraph (A), the
broker, dealer, or investment adviser shall--
``(i) disclose the expected pecuniary
effects to the customer over a time period
selected by the customer and not to exceed
three years; and
``(ii) at the end of the time period
described in clause (i), disclose, by
comparison to a reasonably comparable index or
basket of securities selected by the customer,
the actual pecuniary effects of that time
period, including all fees, costs, and other
expenses incurred to consider non-pecuniary
factors.
``(C) Pecuniary factor defined.--In this paragraph,
the term `pecuniary factor' means a factor that a
fiduciary prudently determines is expected to have a
material effect on the risk or return of an investment
based on appropriate investment horizons.''.
(b) Rulemaking.--Not later than the end of the 12-month period
beginning on the date of enactment of this Act, the Securities and
Exchange Commission shall revise or issue such rules as may be
necessary to implement the amendment made by subsection (a).
(c) Applicability.--The amendment made by subsection (a) shall
apply to actions taken by a broker, dealer, or investment adviser
beginning on the date that is 12 months after the date of enactment of
this Act.
SEC. 3. STUDY ON CLIMATE CHANGE AND OTHER ENVIRONMENTAL DISCLOSURES IN
MUNICIPAL BOND MARKET.
(a) In General.--The Securities and Exchange Commission shall--
(1) conduct a study to determine the extent to which
issuers of municipal securities (as such term is defined in
section 3(a)(29) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(29)) make disclosures to investors regarding
climate change and other environmental matters; and
(2) solicit public comment with respect to such study.
(b) Contents.--The study required under subsection (a) shall
consider and analyze--
(1) the frequency with which disclosures described in
subsection (a)(1) are made;
(2) whether such disclosures made by issuers of municipal
securities in connection with offerings of securities align
with such disclosures made by issuers of municipal securities
in other contexts or to audiences other than investors;
(3) any voluntary or mandatory disclosure standards
observed by issuers of municipal securities in the course of
making such disclosures;
(4) the degree to which investors consider such disclosures
in connection with making an investment decision; and
(5) such other information as the Securities and Exchange
Commission determines appropriate.
(c) Report.--Not later than 1 year after the date of the enactment
of this Act, the Securities and Exchange Commission shall submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives a
report that includes--
(1) the results of the study required under this section;
(2) a detailed discussion of the financial risks to
investors from investments in municipal securities;
(3) whether such risks are adequately disclosed to
investors; and
(4) recommended regulatory or legislative steps to address
any concerns identified in the study.
SEC. 4. STUDY ON SOLICITATION OF MUNICIPAL SECURITIES BUSINESS.
(a) In General.--The Securities and Exchange Commission shall--
(1) conduct a study on the effectiveness of each covered
rule in preventing the payment of funds to elected officials or
candidates for elected office in exchange for the receipt of
government business in connection with the offer or sale of
municipal securities; and
(2) solicit public comment with respect to such study.
(b) Contents.--The study required under subsection (a) shall
consider and analyze--
(1) the effectiveness of each covered rule, including
whether each covered rule accomplishes the intended effect of
such covered rule and has any unintended adverse effects;
(2) the frequency and scope of enforcement actions
undertaken pursuant to each covered rule;
(3) the degree to which--
(A) persons subject to each covered rule--
(i) have in effect policies and procedures
intended to ensure compliance with each such
covered rule; and
(ii) are disadvantaged from participating
in the political process generally and in
relation to persons who solicit or receive
government business or government licenses,
permits, and approvals other than in connection
with the offer or sale of municipal securities;
and
(B) other State and Federal laws and regulations
impact the solicitation of municipal securities
business; and
(4) such other information as the Securities and Exchange
Commission determines appropriate.
(c) Report.--Not later than 1 year after the date of the enactment
of this Act, the Securities and Exchange Commission shall submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives a
report that includes--
(1) the results of the study required under this section;
(2) an analysis of the extent to which persons affiliated
with small businesses, as well as persons affiliated with
minority and women opened businesses, have been affected by the
covered rules; and
(3) recommended regulatory or legislative steps to address
any concerns identified in the study.
(d) Definitions.--In this section:
(1) Covered rule.--The term ``covered rule'' means--
(A) Rule G-38 of the Municipal Securities
Rulemaking Board; and
(B) Rule 206(4)-5 (17 C.F.R. 275.206(4)-5).
(2) Municipal securities.--The term ``municipal
securities'' has the meaning given the term in section 3(a)(29)
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(29)).
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