Plain Language Summary
# ESG Act of 2025 Summary **What the Bill Would Do** The ESG Act of 2025 would change how investment professionals—including brokers, dealers, and investment advisers—determine what serves their customers' best interests. Currently, these professionals must prioritize customer interests over their own financial gains. This bill would narrow that requirement by stating that investment decisions must be based primarily on "pecuniary factors" (financial metrics that directly affect investment performance), unless a customer specifically asks for something different. The bill also requires the Securities and Exchange Commission (SEC) to report on how municipal bonds disclose climate and environmental information, and to evaluate rules designed to prevent corruption in municipal securities sales. **Who It Affects and Current Status** The bill would primarily affect investment professionals and their clients, particularly those investing through brokers and advisers.
It could impact how much consideration investors receive regarding non-financial factors (such as environmental, social, or governance concerns) in their investment strategies. The bill is currently in committee, meaning it has been introduced but has not yet been debated or voted on by the full House of Representatives. The sponsor is Rep. Andy Barr (R-KY).
CRS Official Summary
Ensuring Sound Guidance Act of 2025 or the ESG Act of 2025 This bill further defines the best interest of a customer for purposes of the standard of conduct for all brokers, dealers, and investment advisers. Currently, these professionals must act in the best interest of the customer without regard to the financial or other interests of the professional providing the advice. The bill adds that the best interest standard must be based on pecuniary factors (i.e., a factor that a fiduciary determines will have a material effect on an investment's performance) unless the customer otherwise directs.In addition, the Securities and Exchange Commission must report on (1) municipal bond disclosures regarding climate change and environmental matters, and (2) the effectiveness of specified rules in preventing the payment of government officials or candidates in exchange for government business in connection with the sale or offer of municipal securities.
Latest Action
Referred to the House Committee on Financial Services.