Blackburn, Cotton Introduce Bill To Protect Main Street Investors From Environmental, Social, and Governance (ESG) Risk

August 31, 2023

NASHVILLE, TENN. – U.S. Senators Marsha Blackburn (R-Tenn.) and Tom Cotton (R-Ark.) introduced the Ensuring Sound Guidance (ESG) Act, legislation that will protect Americans’ savings and retirement accounts from politically-motivated asset managers. This legislation would require investment advisors and retirement plan sponsors to consider principally financial factors such as maximizing returns and minimizing risk.

The legislation will maintain investor choice while ensuring that focusing on the best investment outcome is the default practice for funds managing Americans’ investment and retirement savings.

Senators Mike Braun (R-Ind.), Ted Budd (R-N.C.), Kevin Cramer (R-N.D.), James Risch (R-Idaho), and Rick Scott (R-Fla.) are additional co-sponsors of the legislation. Congressman Andy Barr (R-Ky.) introduced companion legislation in the House in June.   

“Asset managers such as Blackrock and Vanguard should principally focus their investments on yielding the highest return for investors,” said Senator Blackburn. “These companies should not employ ESG standards to prioritize investments in companies that push woke climate change initiatives while pulling investments from traditional energy businesses. This bill would ensure investment fund managers make decisions that offer the greatest financial benefit to their clients, not push woke priorities.”

“Investment funds like Blackrock that millions of Americans’ trust with their hard-earned savings should prioritize investments that result in the highest returns—not fund ESG scams. My bill will make sure investment fund managers are making the best financial decisions on behalf of their clients,” said Senator Cotton.

“Asset managers should be in the business of maximizing returns for investors, not pushing their own political agenda at the expense of everyday Americans. Our proposed legislation safeguards the savings efforts of hardworking Americans. This critical legislation not only guarantees that advisers make prudent investment choices based on financial factors, but also empowers savers to decide how their money is invested, contrary to the Department of Labor's (DOL) finalized rule. We must take significant action to protect retail investors and retirees from the cancer within our capital markets that is ESG, which prioritizes higher-fee, less diversified and lower return investments,” said Congressman Barr.  

Bill text may be found here.