119-hr2358

[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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