ESG Act of 2025

LEGISLATIVE PROGRESS

STEP 2 OF 8

Introduced

In Committee

Reported

Passed House

Passed Senate

Conference

To President

Became Law

Introduced
In Committee
Reported
Passed House
Passed Senate
Conference
To President
Became Law

WHAT THE BILL DOES

AI-written

This bill matters because it fundamentally changes the legal definition of what constitutes an investor's "best interest" when receiving financial advice. By prioritizing financial returns (pecuniary factors) over all other considerations unless explicitly waived, it could shift the landscape for investing with a focus on environmental, social, and governance (ESG) factors. If this bill becomes law, investors seeking to align their investments with personal values might find it more complicated to do so, as advisors would be legally bound to prioritize financial metrics first.

It also brings greater scrutiny to the municipal bond market, which is crucial for funding local infrastructure and services. The proposed studies could lead to increased transparency regarding climate risks and help prevent corruption in how these bonds are issued. For voters, this means a potential re-evaluation of how their retirement savings or investment portfolios are managed, and possibly more clarity on the financial risks and integrity of local government borrowing.

KEY PROVISIONS

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Requires financial advisors to determine a customer's "best interest" based primarily on financial factors (like risk and return).

This means advisors must prioritize financial performance unless a customer specifically allows other factors.

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Allows financial advisors to consider non-financial factors (like environmental or social impacts) only if the customer provides informed written consent.

This sets a clear condition for when non-financial considerations can be part of investment advice.

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Mandates financial advisors to disclose expected and actual financial effects, including fees, if a customer consents to considering non-financial factors.

This ensures transparency regarding the financial impact of value-based investing choices.

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Requires the SEC to study how municipal bond issuers disclose climate change and other environmental information to investors.

This could lead to new rules or standards for how cities and towns share environmental risks related to their bonds.

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Requires the SEC to study the effectiveness of rules designed to prevent "pay-to-play" schemes in the municipal bond market.

This aims to ensure fairness and prevent corruption in how local government bonds are awarded.

DEADLINES & DATES

AI-extracted

An AI model extracted this from the bill’s official record and can make mistakes. Check the official text ↗ (opens in new tab)

Not later than 12 months after the date of enactment of this Act

Securities and Exchange Commission must revise or issue rules to implement the changes regarding pecuniary factors.

12 months after the date of enactment of this Act

The amendment regarding pecuniary factors applies to actions taken by brokers, dealers, or investment advisers.

Not later than 1 year after the date of enactment of this Act

Securities and Exchange Commission must submit a report on the study of climate change and environmental disclosures in the municipal bond market to Congress.

Not later than 1 year after the date of enactment of this Act

Securities and Exchange Commission must submit a report on the study of the solicitation of municipal securities business to Congress.

GLOSSARY

AI-written

Investment Advisers Act of 1940: A federal law that regulates the activities of investment advisors, setting standards for how they conduct business and interact with clients.
Pecuniary factors: Factors that are expected to have a material effect on the financial risk or return of an investment, such as a company's profits, debt, or market performance.
Non-pecuniary factors: Factors that are not directly related to the financial risk or return of an investment, such as a company's environmental impact, social policies, or corporate governance practices (often referred to as ESG factors).
Securities and Exchange Commission (SEC): A U.S. government agency responsible for protecting investors, maintaining fair and orderly functioning of securities markets, and facilitating capital formation.
Municipal securities: Debt obligations issued by states, cities, counties, and other governmental entities to finance public projects like schools, roads, or hospitals.
Broker, dealer, or investment adviser: Professionals or firms that provide investment advice, buy and sell securities on behalf of clients, or both.
Informed consent, in writing

ACTION TIMELINE

2 EVENTS

MAR 26, 25

Introduced in House

INTROREFERRAL

MAR 26, 25

Referred to the House Committee on Financial Services.

INTROREFERRAL

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Financial Services CommitteeReferred

Mar 26, 2025

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LEGISLATIVE PROGRESS

WHAT THE BILL DOES

KEY PROVISIONS

SPONSORSHIP

ACTION TIMELINE

BILL INFO

READER REACTIONS

Discussion

ESG Act of 2025

LEGISLATIVE PROGRESS

WHAT THE BILL DOES

KEY PROVISIONS

DEADLINES & DATES

GLOSSARY

ACTION TIMELINE

SPONSORS

READER REACTIONS

What do you think?

Discussion

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ESG Act of 2025

LEGISLATIVE PROGRESS

WHAT THE BILL DOES

KEY PROVISIONS

SPONSORSHIP

ACTION TIMELINE

BILL INFO

READER REACTIONS

Discussion

ESG Act of 2025

LEGISLATIVE PROGRESS

WHAT THE BILL DOES

KEY PROVISIONS

DEADLINES & DATES

GLOSSARY

ACTION TIMELINE

SPONSORS

READER REACTIONS

What do you think?

Discussion

MORE INFORMATION

Committee Referrals