Republicans Introduce Anti-ESG Bill for Retirement Investing

The government shutdown has not slowed down the debate over environmental, social and governance factors.

Senator Bill Cassidy, R-Louisiana, who chairs the Senate Committee on Health, Education, Labor, and Pensions, on October 31, reintroduced the Restoring Integrity in Fiduciary Duty Act, which would establish in law the ESG rule from President Donald Trump’s first term by which fiduciaries must only consider “pecuniary,” or financial, factors when making investment decisions for retirement plans governed by the Employee Retirement Income Security Act.

“Fiduciaries’ sole responsibility is to prioritize what is best for the workers’ hard-earned savings,” Cassidy said in a statement. “These pro-worker, pro-family bills protect millions of Americans’ retirement savings from political ideology.”

In addition to stating that fiduciaries should only consider financial factors, the bill states that when two investment options are identical, fiduciaries should make “random choices.” The rule under former President Joe Biden did not mandate that fiduciaries consider ESG factors but allowed them to use ESG considerations as a “tiebreaker” if two investment options offered the same rate of return.

Although the legislation is unlikely to pass—it did not in 2024—it likely reinforces the direction the Department of Labor is taking with its new ESG rule, the development of which was announced in May.

The ESG rule has been a hot issue between Democrats and Republicans, resulting in the rule changing each time a new party is represented in the White House.

Meanwhile, Senator Jim Banks, R-Indiana, introduced the Providing Complete Information to Retirement Investors Act. The legislation mandates that employer-sponsored defined contribution retirement plans explain to participants the differences between investments selected by ERISA fiduciaries and those chosen through a brokerage window by the participants themselves.

Additionally, it would require ERISA plans to notify investors every time they transfer funds into or out of a brokerage window, highlighting that the investments are not fiduciary-selected and may lead to lower returns.

Both bills were referred to the Senate HELP Committee.