(A) incorporate all relevant factors, includ-
ing environmental, social, and governance (here-
inafter in this Act referred to as ‘‘ESG’’) fac-
tors, into investment analysis and decision-mak-
ing processes, consistent with the investment 
time horizons of plan participants and bene-
ficiaries; 
(B) encourage the adoption of best prac-
tices for ESG performance in the companies or 
other entities in which they invest; 
(C) consider plan participants’ and bene-
ficiaries’ sustainability-related interests and 
preferences when making investment decisions; 
(D) consider the impact of plan invest-
ments on the stability and resilience of the fi-
nancial system; and 
(E) disclose how they have implemented 
these commitments. 
(2) There is now incontrovertible evidence that 
ESG factors are financially material to investors and 
relevant to investment decisionmaking. 
SEC. 3. PURPOSE. 
The purpose of this Act is to require retirement and 
welfare benefit plans that are covered by the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1001 
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et seq.), to adopt and implement policies in consideration 
of ESG factors when making investment decisions, be-
cause considering ESG factors is relevant to the fiduciary 
duty of prudence, as such factors help ensure investments’ 
long-term sustainability. 
SEC. 4. AMENDMENTS TO THE EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974. 
(a) DISCLOSURE
OF
SUSTAINABLE
INVESTMENT 
POLICIES.—Section 102 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1022) is amended 
in subsection (b), by inserting ‘‘the sustainable investment 
policy of the plan (as established under section 
402(b)(5));’’ after ‘‘collective bargaining agreement;’’. 
(b) ESTABLISHMENT OF SUSTAINABLE INVESTMENT 
POLICY.—Section 402 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1102) is amend-
ed— 
(1) in subsection (b)— 
(A) in paragraph (3), by striking ‘‘and’’; 
(B) in paragraph (4), by striking the pe-
riod and insert ‘‘, and’’; and 
(C) by inserting after paragraph (4) the 
following: 
‘‘(5) provide a sustainable investment policy of 
the plan in accordance with subparagraph (d) unless 
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pbinns on DSKJLVW7X2PROD with BILLS
the plan elects to rely on the sustainable investment 
policies of the plan’s fiduciaries as defined by section 
3(38)’’; and 
(2) by adding after subsection (c) the following: 
‘‘(d)(1) A sustainable investment policy under sub-
section (b)(5) shall include guidelines with respect to— 
‘‘(A) corporate governance practices by entities 
in which the plan invests, including executive com-
pensation, board diversity, the independence of 
board chairs, political spending and lobbying disclo-
sure; 
‘‘(B) characteristics of workforces employed by 
entities in which the plan invests, including com-
pensation and benefits, health and safety, diversity 
and demographics, skills and training, retention and 
turnover, full-time and part-time employment, and 
the use of independent contractors; 
‘‘(C) labor and human rights compliance by en-
tities in which the plan invests, including workers’ 
freedom of association, the right to collectively bar-
gain, and the prevention of employment discrimina-
tion, child labor, and forced labor in company oper-
ations and supply chains; 
‘‘(D) the implementation, to the extent prac-
ticable, of practices which enhance diversity and in-
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pbinns on DSKJLVW7X2PROD with BILLS
clusion performance within the workforce, senior 
leadership, business procurement, philanthropy, and/ 
or board of directors; 
‘‘(E) environmental risks to the assets and 
properties of entities invested in by the plan and re-
lated disclosures, including— 
‘‘(i) climate risks and contributions; 
‘‘(ii) environmental risks that may not be 
related to climate, such as industrial pollution, 
habitat destruction, and other forms of environ-
mental degradation; 
‘‘(iii) impact to species endangerment and 
extinction; and 
‘‘(iv) pollution of land, air, and water re-
lated to the operation of the entities invested in 
by the plan; 
‘‘(F) due diligence and practices regarding sup-
ply chain management, including environmental, 
human rights, and worker compensation consider-
ations; and 
‘‘(G) tax practices of entities in which the plan 
invests, including international tax avoidance strate-
gies and tax payment disclosure. 
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pbinns on DSKJLVW7X2PROD with BILLS
‘‘(2) A plan subject to the requirements of section 
402(d)(1) shall conduct a review of the sustainable invest-
ment policy under subsection (b)(5) on an annual basis. 
‘‘(3) Section 404(a) shall not be construed to prohibit 
a plan fiduciary from doing the following: 
‘‘(A) In choosing among investments with com-
mensurate degrees of risk and rates of return, to se-
lect one or more such investments based on environ-
mental, social, and governance considerations. 
‘‘(B) To monitor or dispose of a plan invest-
ment alternative based on considerations that in-
clude environmental, social, and governance consid-
erations. 
‘‘(C) Vote proxies in accordance with the plan’s 
proxy voting guidelines.’’. 
(c) QUALIFIED INVESTMENT ALTERNATIVES.—Sec-
tion 404(c)(5) of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1104(c)(5)) is amended by 
adding at the end the following: 
‘‘(5) A qualified default investment alternative 
(as defined in section 2550.404c–5(e) of title 29, 
Code of Federal Regulations, or a successor regula-
tion) may include an investment alternative— 
‘‘(A) with an environmental, social, and 
governance investment mandate; or 
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‘‘(B) that was selected, in part, on the 
basis of an environmental, social, and govern-
ance consideration.’’. 
Æ 
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