The US House of Representatives voted 213–205 on Thursday to pass H.R. 2988, the Protecting Prudent Investment of Retirement Savings Act, legislation that would restrict the extent to which retirement fund managers can consider environmental, social and governance (ESG) factors in investment decisions.
The bill was introduced earlier this year by Representative Rick W. Allen and seeks to codify that fiduciaries managing retirement savings under the Employee Retirement Income Security Act (ERISA) must prioritise financial returns and retirement security. Supporters of the measure argue that it is intended to prevent the use of ESG considerations that they view as politically or socially motivated.
The legislation is aimed at overturning a rule finalised by the Department of Labor during the administration of Joe Biden, which clarified that fund managers are permitted to consider ESG factors when they are financially relevant and to use them as a tiebreaker when competing investments are otherwise economically equivalent.
Following the vote, Allen said passage of the bill marked “a significant win for retirees and families across the country”, arguing that under the Biden administration “Americans’ hard-earned savings were put at risk for the sole purpose of appeasing left-wing environmentalists through risky ESG funds”. He added: “H.R. 2988 ensures that retirement plan sponsors make investment decisions exclusively based on economic factors and financial returns – protecting the retirement security of those saving for a brighter future,” and said he hoped the Senate would move swiftly to advance the legislation.
House Education and Workforce Committee Chairman Tim Walberg said the bill reaffirmed what he described as a basic principle that fiduciaries must act in the best financial interests of workers and retirees. He criticised the Biden administration’s ESG policies, stating that Congress had previously expressed bipartisan opposition to the Labor Department rule, which was later vetoed by President Biden.
House Speaker Mike Johnson said the legislation would prevent fiduciaries from “sacrificing the retirement security of millions of Americans instead of maximising financial returns”, while House Majority Leader Steve Scalise said retirement plan managers should focus solely on financial performance rather than advancing what he described as a political agenda.
The measure was one of several proposals advanced by the House Education and Workforce Committee and brought to the floor this week. The vote followed an earlier setback for Republicans, when six members of the party joined Democrats to block a separate bill easing overtime rules. After that defeat, Republican leadership withdrew another proposal that would have tightened joint-employer standards after concluding it lacked sufficient support to pass.
The bill now moves to the Senate, where similar legislation has previously stalled.
