Retirees Sustainable Investment Opportunities Act of 2021
Bill: H.R.3604 | Sponsor: Rep. Levin, Andy (D-MI)
Policy area: Labor and Employment

Summary:
Retirees Sustainable Investment Opportunities Act of 2021
This bill requires a retirement or employee benefit plan that is regulated under the Employee Retirement Income Security Act of 1974 to disclose whether it has adopted a sustainable investment policy. A sustainable investment policy must address considerations relating to corporate governance practices, labor and human rights practices, and the environmental risks posed by the entities receiving investments.

To amend the Employee Retirement Income Security Act of 1974 to enable 
    consideration and disclosure by retirement plans of Sustainable 
                          Investment Policies.

    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 ``Retirees Sustainable Investment 
Opportunities Act of 2021''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) There is now incontrovertible evidence that 
        environmental, social, and governance (hereinafter in this Act 
        referred to as ``ESG'') factors can have material and 
        substantial effects on investment performance.
            (2) The United States Department of Labor which is 
        responsible for administering and enforcing the Employee 
        Retirement Security Act of 1974 has historically recognized 
        that retirement plans may make economically targeted 
        investments (``ETIs''), that is, investments that offer the 
        potential for economic benefits, such as local job creation, 
        community economic development, and affordable and workforce 
        housing construction, in addition to investment returns, 
        provided such investments otherwise comply with ERISA's 
        fiduciary requirements.
            (3) ESG and ETI-related factors are referred to in this Act 
        as ``sustainability considerations'' and investments guided by 
        sustainability considerations are referred to as ``sustainable 
        investments.'' Sustainable investments have the potential to 
        contribute to the long-term well-being and resilience of 
        individuals and communities in this nation and around the world 
        while earning investment returns comparable to or better than 
        investments with similar risk that do not take these factors 
        into account.
            (4) Sustainable investing is now among the fastest growing 
        segments of the investment industry with broad and growing 
        interest from both individual investors and institutional asset 
        managers. Nevertheless, sustainable investments are virtually 
        absent from ERISA-regulated retirement plans in the United 
        States.
            (5) Retirement plans and participants in individual account 
        retirement plans should have the opportunity to make and hold 
        sustainable investments, provided ERISA's fiduciary 
        requirements are otherwise met.
            (6) Accordingly, fiduciaries for retirement plans should--
                    (A) incorporate all relevant factors, including 
                sustainability-related factors, into investment 
                analysis and decision-making processes, consistent with 
                the investment time horizons of plan participants and 
                beneficiaries;
                    (B) be permitted to consider factors relevant to 
                sustainability, whether or not they can be demonstrated 
                to be financially material, provided doing so does not 
                diminish anticipated investment returns or increase 
                investment risk and is otherwise consistent with 
                ERISA's fiduciary requirements;
                    (C) encourage the adoption of best practices for 
                sustainability performance and sustainability impacts 
                in the companies or other entities in which they 
                invest;
                    (D) consider plan participants' and beneficiaries' 
                sustainability-related interests and preferences when 
                making investment decisions;
                    (E) consider the impact of plan investments on the 
                stability and resilience of the financial system and on 
                broad market returns as a result of the sustainability 
                characteristics of those investments;
                    (F) consider participation in shareholder 
                engagement and proxy activities, policy advocacy and 
                similar actions based on sustainability considerations; 
                and
                    (G) disclose how they have implemented these 
                commitments.

SEC. 3. PURPOSE.

    The purpose of this Act is to enable retirement and welfare benefit 
plans and participants in individual account retirement plans that are 
covered by the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1001 et seq.), to make and hold sustainable investments, 
consistent with the fiduciary standards, requirements, and procedures 
of said Employee Retirement Income Security Act.

SEC. 4. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
              1974.

    (a) Disclosure of Sustainable Investment Policies.--Section 102 of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1022) 
(``ERISA'') is amended in subsection (b), by inserting ``a statement of 
whether or not the plan has adopted a sustainable investment policy 
pursuant to section 402(b)(5) of ERISA;'' after ``collective bargaining 
agreement;''.
    (b) Establishment of Sustainable Investment Policy.--Section 402 of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1102) is 
amended--
            (1) in subsection (b)--
                    (A) in paragraph (3), by striking ``and'';
                    (B) in paragraph (4), by striking the period and 
                insert ``, and''; and
                    (C) by inserting after paragraph (4) the following:
            ``(5) adopt a sustainable investment policy of the plan in 
        accordance with subparagraph (d), provided a plan may elect not 
        do so if it gives notice to plan participants or beneficiaries 
        in writing of such election''; and
            (2) by adding after subsection (c) the following:
    ``(d)(1) A sustainable investment policy under subsection (b)(5) 
shall address sustainability considerations including, without 
limitation, the following:
            ``(A) Economically targeted investment considerations 
        including, the potential for achieving economic benefits, such 
        as local job creation, community economic development, and 
        affordable and workforce housing construction, in addition to 
        investment returns.
            ``(B) Social considerations including--
                    ``(i) characteristics of workforces employed by 
                entities in which the plan invests, including 
                compensation 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;
                    ``(ii) labor and human rights compliance by 
                entities in which the plan invests, including workers' 
                freedom of association, the right to collectively 
                bargain, and the prevention of employment 
                discrimination, child labor, and forced labor in 
                company operations and supply chains;
                    ``(iii) due diligence and practices regarding 
                supply chain management, including environmental, human 
                rights, and worker compensation considerations; and
                    ``(iv) the implementation, to the extent 
                practicable, of practices which enhance diversity and 
                inclusion within the workforce, senior leadership, 
                business procurement, and philanthropy.
            ``(C) Environmental considerations including--
                    ``(i) the potential to reduce and ultimately 
                eliminate net greenhouse gas emissions associated with 
                business activities and to mitigate exposure to 
                climate-related risks to the businesses, assets and 
                properties of entities invested in by the plan;
                    ``(ii) the potential to mitigate other climate-
                related and associated environmental harms and risks, 
                such as industrial pollution, habitat destruction, 
                deforestation, species endangerment and extinction, and 
                other forms of environmental degradation;
                    ``(iii) the potential to address and rectify issues 
                of environmental justice and the inequitable 
                environmental impacts of certain business operations on 
                historically disadvantaged communities; and
                    ``(iv) the potential to provide workers affected by 
                the shift to a low carbon economy with a just 
                transition by creating decent work and quality jobs.
            ``(D) Governance considerations including--
                    ``(i) corporate governance practices by entities in 
                which the plan invests, including executive 
                compensation, board diversity, worker board 
                representation and codetermination, the independence of 
                board chairs, political spending and lobbying 
                disclosure; and
                    ``(ii) tax practices of entities in which the plan 
                invests, including international tax avoidance 
                strategies and tax payment disclosure.
            ``(E) Other relevant economically targeted investment, 
        environmental, social, and governance considerations and 
        factors.
    ``(2) A plan shall be deemed to have adopted a sustainable 
investment policy for the purposes of subsection (b)(5) if it 
incorporates the sustainability considerations set forth in subsection 
(d)(1) into a previously adopted investment policy of the plan or if 
the plan elects to be governed by a sustainable investment policy 
otherwise meeting the requirements of subsection (d)(1) adopted by a 
third-party fiduciary to the plan.
    ``(3) A plan that has adopted a sustainable investment policy 
pursuant to subsection (b)(5), including plans relying on subsection 
(d)(2), shall conduct a review of such policy on an annual basis.''.
    (c) Utilization of Certain Sustainability Considerations.--Section 
404 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1104) is amended in subsection 404(a) by adding after subsection (2) 
the following:
            ``(3) This subsection 404(a) shall not be construed to 
        prohibit a plan fiduciary from doing the following:
                    ``(A) In choosing among investments with comparable 
                degrees of risk and rates of return, selecting one or 
                more such investments based on one or more 
                sustainability considerations as set forth in section 
                402(d)(1), regardless of whether such considerations 
                are determined to be financially material. For the 
                purposes hereof, the determination that investments 
                have comparable degrees of risk and anticipated rates 
                of return shall be a determination that a prudent man 
                acting in like capacity and familiar with such matters 
                could reasonably be expected to make on a forward-
                looking basis.
                    ``(B) Incorporating sustainability considerations 
                into the monitoring of or decisions regarding the 
                disposition of plan investments.
                    ``(C) Exercising proxy voting rights in accordance 
                with the plan's proxy voting guidelines which may 
                include sustainability considerations.
                    ``(D) Considering as financially material to 
                retirement benefits the potential for increased 
                contributions to the plan resulting from a plan 
                investment.''.
    (d) Individual Account Plans.--Section 404 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1104) is amended in 
subsection 404(c)(1) by adding after subsection (C) the following:
                    ``(D) In selecting investment alternatives for 
                individual accounts, including investment alternatives 
                meeting the requirements of section 404(c)(5) of this 
                title, a plan fiduciary may include investment 
                alternatives selected in part on the basis of 
                sustainability considerations as set forth in section 
                402(d)(1) regardless of whether such considerations are 
                determined to be financially material, provided any 
                such alternative is determined to have a degree of risk 
                and anticipated rate of return comparable to other 
                investments of similar type determined by the fiduciary 
                to be available and appropriate for inclusion in the 
                plan. For the purposes hereof, the determination that 
                investments have comparable degrees of risk and rates 
                of return shall be a determination that a prudent man 
                acting in like capacity and familiar with such matters 
                could reasonably be expected to make on a forward-
                looking basis.''.
    (e) Establishment of Sustainable Investment Policy Technical 
Assistance Program.--Not later than 90 days after the date of enactment 
of this Act, the Assistant Secretary of Labor for Employee Benefits 
shall establish a technical assistance program to provide educational 
materials and technical assistance to plans to comply with the 
amendments made by this Act.
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