House Passes Bill to Restrict ESG Investment in 401(k) Accounts

The House of Representatives passed, by a 213 to 205 vote on Thursday, legislation that would make it harder for fiduciaries to consider environmental, social and governance factors when making investment decisions.

The Protecting Prudent Investment of Retirement Savings Act, introduced by Representative Rick Allen, R-Georgia, would limit fiduciary consideration of “nonpecuniary factors” such as  ESG factors when managing retirement accounts under the Employee Retirement Income Security Act, requiring fiduciaries to instead focus solely on maximizing returns.

A Department of Labor rule from former President Joe Biden’s administration allowed retirement fund managers to weigh ESG factors in two scenarios: when those factors directly affect financial returns or when choosing between investments that are otherwise identical in economic value. President Donald Trump’s DOL rescinded that Biden-era rule and previously announced that it will replace it.

The new DOL rule will likely return the department’s position to its prior one during Trump’s first term, which, like the anti-ESG bill, directed fiduciaries to solely seek to maximize investment returns.

Just before the October 2025 government shutdown, Senator Bill Cassidy, R-Louisiana, introduced companion anti-ESG legislation in the Senate that mirrors the House bill. It was referred to the Senate Committee on Health, Education, Labor and Pensions, but it has yet to receive a vote.