Sustainable Investment Policies Act of 2021
Bill: H.R.3605 | Sponsor: Rep. Levin, Andy (D-MI)
Policy area: Finance and Financial Sector

Summary:
Sustainable Investment Policies Act of 2021
This bill requires investment advisers to establish and follow a sustainable investment policy, including policies relating to the corporate governance practices, labor and human rights practices, and the environmental risks of the entities receiving investments.

To amend the Investment Advisers Act of 1940 to enable consideration 
   and promote disclosure and transparency of sustainable investment 
       policies by large asset managers, and for other purposes.

    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 ``Sustainable Investment Policies Act 
of 2021''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Environmental, social, and governance (in this Act 
        referred to as ``ESG'') include the potential for economic 
        benefits, such as local job creation and economic development, 
        in addition to investment returns, as provided by investments 
        sometimes referred to as ``Economically Targeted Investments'' 
        or ``ETIs''.
            (2) There is now incontrovertible evidence that ESG factors 
        can have substantial effects on investment performance and are 
        important to many investors and that investors have a 
        significant interest in such findings.
            (3) Investor findings show a dramatic interest in 
        investments that consider ESG factors.
            (4) Decades of policy interpretations from the Department 
        of Labor and the Securities and Exchange Commission have 
        created confusion as to the obligations of a fiduciary with 
        regard to ESG intergration.
            (5) Recent policies of the Securities and Exchange 
        Commission have had a chilling effect on ESG integration and 
        active ownership with a view toward advancing a sustainable 
        economy.

SEC. 3. SUSTAINABLE INVESTMENT POLICY OF INVESTMENT ADVISERS.

    Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3) is amended by adding at the end the following new subsection:
    ``(o) Sustainable Investment Policy.--
            ``(1) In general.--No person may be registered as an 
        investment adviser under this section unless such person--
                    ``(A) files a sustainable investment policy with 
                the Commission; and
                    ``(B) complies with such policy in carrying out the 
                duties of an investment adviser.
            ``(2) Contents.--A sustainable investment policy described 
        under paragraph (1)(A) shall include the policies of the person 
        with respect to the following:
                    ``(A) Environmental concerns, including 
                environmental risks to the assets and properties of 
                entities in which the funds invest, including--
                            ``(i) climate risks and contributions;
                            ``(ii) associated environmental risks, 
                        including--
                                    ``(I) industrial pollution;
                                    ``(II) habitat destruction;
                                    ``(III) deforestation; and
                                    ``(IV) other forms of environmental 
                                degradation; and
                            ``(iii) pollution of land, air, or water 
                        related to the operation of the entities in 
                        which fund invests.
                    ``(B) Social considerations, including--
                            ``(i) characteristics of workforces 
                        employed by entities in which the fund invests, 
                        including--
                                    ``(I) compensation and benefits;
                                    ``(II) health and safety;
                                    ``(III) diversity and demographics;
                                    ``(IV) skills and training;
                                    ``(V) retention and turnover;
                                    ``(VI) full-time and part-time 
                                employment; and
                                    ``(VII) the use of independent 
                                contractors;
                            ``(ii) labor and human rights compliance by 
                        entities in which the fund invests, including--
                                    ``(I) workers' freedom of 
                                association;
                                    ``(II) the right to collectively 
                                bargain; and
                                    ``(III) the prevention of 
                                employment discrimination, child labor, 
                                and forced labor in the operations and 
                                supply chains of the entity;
                            ``(iii) the implementation of practices 
                        which enhance diversity and inclusion 
                        performance within the workforce, senior 
                        leadership, business procurement, philanthropy, 
                        and the board of directors;
                            ``(iv) due diligence and practices 
                        regarding supply chain management, including--
                                    ``(I) environmental considerations;
                                    ``(II) human rights; and
                                    ``(III) workers' compensation 
                                considerations; and
                            ``(v) the potential for achieving economic 
                        benefits in addition to investment returns.
                    ``(C) Governance considerations, including--
                            ``(i) corporate governance practices by 
                        entities in which the fund invests; and
                            ``(ii) tax practices of entities in which 
                        the fund invests, including international tax 
                        avoidance strategies and tax payment 
                        disclosure.
                    ``(D) Other relevant economically targeted 
                investment, or environmental, social, and governance 
                considerations and factors.
            ``(3) Compliance audit.--
                    ``(A) In general.--Not less than annually, each 
                registered investment adviser shall contract with an 
                auditor to perform an audit of the adviser's compliance 
                with the sustainable investment policy filed with the 
                Commission.
                    ``(B) Report.--An auditor performing an evaluation 
                under subparagraph (A) shall file, and make publicly 
                available, a report on such evaluation to the adviser 
                and the Commission.
                    ``(C) Fiduciary safe harbor.--The Commission may, 
                by order, determine that an investment adviser has not 
                breached its fiduciary duty with respect to 
                consideration of factors outlined under this subsection 
                if the investment adviser is in compliance with this 
                subsection.''.
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