Bill > HR2358

This bill, known as the "Ensuring Sound Guidance Act of 2025" or "ESG Act of 2025", introduces several key provisions affecting investment advisers and municipal securities. First, it amends the Investment Advisers Act of 1940 to require that investment recommendations be primarily based on pecuniary factors (financial considerations that materially affect investment risk or return), with non-pecuniary factors (such as environmental or social considerations) only allowed if the customer provides explicit written consent. When non-pecuniary factors are considered, advisers must disclose the expected and actual financial impacts over a specified time period, comparing performance to a benchmark chosen by the customer. The bill also mandates two separate studies by the Securities and Exchange Commission (SEC): one examining climate change and environmental disclosures in the municipal bond market, which will analyze the frequency and quality of such disclosures and their impact on investor decisions, and another investigating the effectiveness of existing rules preventing improper financial interactions between municipal securities businesses and elected officials. Both studies require the SEC to submit comprehensive reports to Congressional committees within one year, including findings, financial risks, and potential regulatory recommendations. The provisions would become applicable 12 months after the Act's enactment, with the SEC required to issue implementing rules within that timeframe.

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https://www.congress.gov/bill/119th-congress/house-bill/2358/all-info