U.S. Senator Tina Smith Reintroduces Legislation to Support Sustainable Workplace Retirement Plans

WASHINGTON, D.C. [02/16/23]— Today, U.S. Senator Tina Smith (D-Minn.) reintroduced legislation to provide legal certainty to workplace retirement plans that choose to consider environmental, social and governance (ESG) factors in their investment decisions or offer ESG investment options.

“Sustainable investment options are good for retirees and good for our environment—that’s a win-win,” said Sen. Smith, a member of the Senate Banking Committee. “I’m putting forth this legislation because we know there’s a growing demand for sustainable investing, and Congress should act now to provide the legal certainty necessary to make sure workplace retirement plans are able to offer these options to workers across the country.”

Despite considerable demand for sustainable investment options, relatively few workplace retirement plans, such as pensions and 401(k) plans, take sustainable investing principles into account in their investment decisions or provide sustainable investment options to workers. This is the case even though many workers and retirees want their plans to do so.

One of the primary issues hindering plans that want to offer sustainable investment options is an uncertain and regularly changing legal environment. Under the Trump Administration, the Department of Labor issued a rule that imposed new limits on the consideration of environmental, social, and governance (ESG) factors by workplace retirement plans. That rule was rescinded and replaced last year, once again allowing plans to invest sustainably. However, the new rule is currently subject to a legal challenge and is the target of a Congressional Review Act resolution.

The Freedom to Invest in a Sustainable Future Act would put an end to this uncertainty, giving plans the freedom to choose to consider ESG factors in their investment decisions or to offer ESG investment options to plan participants. The bill is cosponsored by Senators Patty Murray (D-WA), Dianne Feinstein (D-CA), Richard Blumenthal (D-CT), Dick Durbin (D-IL), Elizabeth Warren (D-MA), Bernie Sanders (I-VT), Ron Wyden (D-OR), and Ed Markey (D-MA).

You can access a summary of the bill here and text of the bill here.