I 117th CONGRESS 1st Session H. R. 3605 IN THE HOUSE OF REPRESENTATIVES May 28, 2021 Mr. Levin of Michigan (for himself, Mrs. Axne , Mr. Brendan F. Boyle of Pennsylvania , and Mr. García of Illinois ) introduced the following bill; which was referred to the Committee on Financial Services A BILL 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.

1. Short title This Act may be cited as the Sustainable Investment Policies Act of 2021 . 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. 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. .