ESG Act — Pecuniary Factors in Best-Interest Determinations
Current understanding
The ESG Act of 2025 would amend federal securities law to require brokers, dealers, and investment advisers to base best-interest and fiduciary determinations solely on pecuniary factors — economic considerations expected to have a material effect on risk and return — unless the retail customer or client expressly directs otherwise in writing. If enacted, the bill would effectively restrict the incorporation of environmental, social, and governance (ESG) factors into investment advice absent explicit client instruction, redefining the substantive content of Regulation Best Interest and the Investment Advisers Act fiduciary duty. Status: introduced; not enacted.
Evidence log
- 2025-03-26 — ESG Act of 2025: cross-connection with sec-climate-disclosure-rescission: Both constrain ESG’s role in federal securities regulation — one at the disclosure layer (rescinding climate rules), the other at the advice/fiduciary layer (requiring pecuniary-factor primacy). (novelty: 3)