ESG in 2025 for Legal and Compliance Professionals: U.S. Federal Anti-ESG Legislation to Watch For

House Republicans in the 2023-2024 118^th Congress pursued an active anti-ESG agenda. As part of that agenda, bills were introduced – and in some cases passed – in the House of Representatives addressing, among other things, shareholder proposals, public company disclosure requirements, responsibilities of pension plan fiduciaries and proxy advisory firm practices.

With the House remaining in Republican hands for the next two years – albeit by a small margin – and the Senate flipping Republican, some anti-ESG bills introduced in the current 2025-2026 119^th Congress may get more traction than those in the last Congress. And, if anti-ESG legislation makes it to the President’s desk, with a Republican in the White House, passage is likely. 

If a bill does not become law during the Congress in which it is introduced, it is considered “dead.” For a “dead” bill to be enacted in a new Congress, it has to be reintroduced and begin anew its journey through the legislative process. Anti-ESG bills introduced in the 119^th Congress are likely to be based on those introduced in the 118^th. Foreshadowing anti-ESG bills that may be introduced in 2025, this post looks at some of the bills introduced during the last two years. 

The introduction of new anti-ESG bills in Congress is just one of our ESG predictions for 2025. For additional predictions, see our recent post, ESG in 2025 for Legal and Compliance Professionals: 25 Predictions for ’25.

Businesses Over Activists Act (H.R. 4655, introduced July 14, 2023)

Sponsor: Norman (R-SC)

Final status: Reported (Amended) by the House Committee on Financial Services and placed on the Union Calendar, December 19, 2023.

Stated purpose: To amend the Securities Exchange Act to prohibit the Securities and Exchange Commission from compelling the inclusion or discussion of shareholder proposals or proxy solicitation materials. 

Selected provisions:

• The SEC would be prohibiting from compelling an issuer to include in its proxy statement any shareholder proposal or related discussion, except in connection with the election of directors.

In the sponsor’s words: "ESG is an evil pollutant that must be eradicated from corporations and businesses. Ultimately, this bill would solve a freedom of speech issue. The SEC should not and does not have the authority to compel companies to vote on a proposal, especially if it’s irrelevant.” 

Protecting Americans' Retirement Savings from Politics Act (H.R. 4767, introduced July 20, 2023)

Sponsor: Steil (R-WI)

Final status: Reported (Amended) by the Committee on Financial Services and placed on the Union Calendar, December 19, 2023.

Stated purpose: To revise the federal securities laws with respect to shareholder proposals, proxy voting and the registration of proxy advisory firms.

Selected provisions:

• The SEC would be required to revise the resubmission thresholds for shareholder proposals to allow an issuer to exclude a proposal if it addresses substantially the same subject matter as an earlier proposal in the preceding five years, the most recent vote occurred in the last three years and the proposal received less than a specified level of support (depending upon how many times the proposal was up for a vote in the five-year period). 
• An issuer would be permitted to exclude from its proxy statement a shareholder proposal that has been substantially implemented or is duplicative.
• An issuer also would be permitted to exclude a shareholder proposal if the subject matter is environmental, social or political or the proposal relates to a significant social policy issue.
• Proxy advisory firms would be required to register with the SEC, make specified disclosures and satisfy specified operational requirements.
• Institutional investment managers that engage proxy advisory firms would be required to annually report specified information relating to their voting practices. Larger institutional investment managers also would be required to provide specific notices to customers relating to voting and perform economic analyses before voting. 
• Robovoting (automatically voting consistent with proxy advisory firm recommendations) and outsourcing of voting decisions by institutional investors would not be permitted.
• Passively managed funds would not be able to vote proxies solicited by U.S. domestic issuers in a manner inconsistent with beneficial owner instructions or the issuer’s voting recommendation.
• The Investment Advisers Act would be amended to indicate that the best interests of a customer are to be determined using pecuniary factors and that these may not be subordinated to or limited by non-pecuniary factors, except with informed customer consent.

H.R. 4767 is a compilation of eleven previously introduced bills:

• H.R. 4641, the Performance Over Politics Act (Fitzgerald, R-WI) 
• H.R. 4644, the No Expensive, Stifling Governance (No ESG) Act (Houchin, R-IN) 
• H.R. 4640, a bill to authorize the exclusion of shareholder proposals from proxy or consent solicitation material if the subject matter of the shareholder proposal is environmental, social, or political (Donalds, R-FL) 
• H.R. 4657, a bill to clarify that an issuer may exclude a shareholder proposal pursuant to section 240.14a-8(i) of title 17, Code of Federal Regulations, without regard to whether such proposal relates to a significant social policy issue (Rose, R-TN) 
• H.R. 4662, the Corporate Governance Examination Act (Wagner, R-MO) 
• H.R. 4589, a bill to amend the Exchange Act to provide for the registration of proxy advisory firms, and for other purposes (Steil, R-WI) 
• H.R. 4590, a bill to amend the Exchange Act to provide for liability for certain failures to disclose material information in connection with proxy voting advice, and for other purposes (Steil, R-WI) 
• H.R. 4648, a bill to amend the Exchange Act to provide for duties of certain investment advisors, asset managers, and pension funds with respect to voting on shareholder proposals, and for other purposes (Loudermilk, R-GA) 
• H.R. 4656, the Protecting Americans’ Savings Act (Nunn, R-IA) 
• H.R. 4645, the Empowering Shareholders Act (Huizenga, R-MI) 
• H.R. 4600, the Protecting Retail Investors’ Savings Act (Barr, R-KY)

In the sponsor’s words: “Radical activists have been using your hard-earned retirement savings to advance their agenda. I’m focused on ensuring retirement and pension funds are being managed based on the importance of protecting your retirement savings, not political agendas. This bill is an important step towards empowering investors, restoring transparency, and enhancing competition.” 

Prioritizing Economic Growth Over Woke Policies Act (H.R. 4790, introduced July 20, 2023)

Sponsor: Huizenga (R-MI)

Additional sponsors:  Meuser (R-PA), Lucas (R-OK) and Mooney (R-WV)

Final status: Passed in the House, September 19, 2024 (212 Republicans and 3 Democrats voted in favor); referred to the Senate Committee on Banking, Housing, and Urban Affairs, September 23, 2024.

Stated purpose: To amend the federal securities laws with respect to the materiality of disclosure requirements and to establish the Public Company Advisory Committee, among other purposes.

Selected provisions:

• Whenever the SEC adopts issuer disclosure requirements under the Securities Act or Exchange Act, it would be required to expressly provide that an issuer only is required to disclose information in response that the issuer has determined is material.
• A person who fails to disclose non-material information required to be disclosed under the federal securities laws or related regulations would not be liable for that failure in a private action.
• A Public Company Advisory Committee would be established to advise the SEC on its rules, regulations and policies with regard to its mission of protecting investors, maintaining fair, orderly and efficient markets and facilitating capital formation.
• The Business Over Activists Act (H.R. 4655) would be adopted, which would limit the SEC's ability to compel issuers to include shareholder proposals in proxy statements that do not relate to the election of directors. This Act is discussed earlier in this post.
• The Protecting Americans’ Retirement Savings from Politics Act (H.R. 4767) would be adopted. This Act also is discussed earlier in this post. 
• Would adopt the American Financial Institution Regulatory Sovereignty and Transparency Act (the American FIRST Act). Among other things, this Act would prohibit federal banking regulators from engaging with specified international organizations on climate-related financial risk unless the regulator has issued a report to the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs describing the activities in which it participates and a detailed accounting of the funding sources of the covered international organization. The covered international organizations under the American FIRST Act are the Financial Stability Board, the Bank for International Settlements, the Network of Central Banks and Supervisors for Greening the Financial System and the Basel Committee on Banking Supervision.

In the sponsor’s words: “Today’s legislation is a culmination of almost two years of work by House Republicans. These sensible policies will encourage innovation, improve access to investment opportunities, and foster economic growth. ... The Promoting Economic Growth Over Woke Policies Act corrects the misguided social policies that have been weaponized by rogue regulators and liberal activist investors at the expense of financial returns.” 

Retirement Proxy Protection Act (H.R. 5337, introduced September 5, 2023)

Sponsor: Houchin (R-IN)

Additional sponsors: Huizenga (R-MI), Sessions (R-TX), Grothman (R-WI), Wilson (R-SC), Estes (R-KS), Barr (R-KY), Flood (R-NE) and Owens (R-UT)

Final status: Reported (Amended) by the House Committee on Education and the Workforce and placed on the Union Calendar, September 26, 2023. Incorporated into the Protecting Americans' Investments from Woke Policies Act (H.R. 5339, introduced September 19, 2024).

Stated purpose: To amend ERISA to clarify the application of prudence and exclusive purpose duties to the exercise of shareholder rights.

Selected provisions:

• A fiduciary would be required to act prudently and solely in the economic interests of pension plan participants and beneficiaries and for the exclusive purpose of providing benefits to participants and beneficiaries.
• A fiduciary would be required to maintain records of proxy votes and activity or other exercises of shareholder rights, including any attempts to influence management.
• A fiduciary would not be permitted to subordinate the interests of plan participants and beneficiaries to any non-pecuniary objective or promote non-pecuniary benefits or goals unrelated to financial interests.
• If the authority to vote proxies or exercise other shareholder rights has been delegated to an investment manager or proxy voting advisory firm, the fiduciary would be required to monitor for compliance with the foregoing requirements. 
• With respect to a decision not to vote a proxy, a fiduciary would satisfy its fiduciary responsibilities if it adopts a proxy voting policy with safe harbors for not voting on proposals that are not substantially related to the issuer’s business or material or that involve less than 5% of the fiduciary’s assets.

In the sponsor’s words: “Americans invest to secure a brighter future for themselves and their families, not to bankroll Democrats’ radical initiatives and pet projects. The Biden administration’s policies have driven our economy into the ground. ESG investing only makes matters worse by putting the hard-earned savings of millions of Americans in jeopardy. Our bills are focused on rolling back Biden’s destructive ESG rule and protecting the financial future of working Americans, retirees, and their families.” 

No Discrimination in My Benefits Act (H.R. 5338, introduced September 5, 2023)

Sponsor: Good (R-VA)

Final status: Reported (Amended) by the House Committee on Education and the Workforce and placed on the Union Calendar, September 26, 2023. Incorporated into the Protecting Americans' Investments from Woke Policies Act (H.R. 5339, introduced September 19, 2024).

Stated purpose: To amend ERISA to establish that fiduciaries must act with prudence and loyalty when selecting service providers for pension plans.

Selected provisions:

• Fiduciaries of employee benefit plans would be required to select service providers without regard to race, color, religion, sex or national origin.

In the sponsor’s words: “President Biden has imposed his woke DEI agenda throughout every part of the Federal Government. From job descriptions to retirement plans, Biden is using every lever of power to advance his agenda in the name of ‘equity.’ My legislation will protect employee benefits from the political agendas of Washington bureaucrats.“

Providing Complete Information to Retirement Investors Act (H.R. 5340, introduced September 5, 2023)

Sponsor: Banks (R-IN)

Additional sponsor: Houchin (R-IN)

Final status: Reported (Amended) by the House Committee on Education and the Workforce and placed on the Union Calendar, September 26, 2023. Incorporated into the Protecting Americans' Investments from Woke Policies Act (H.R. 5339, introduced September 19, 2024).

Stated purpose: To amend ERISA to ensure that pension plans provide notice to participants and beneficiaries on risks associated with certain investments.

Selected provisions:

• If a plan participant or beneficiary can choose from designated investment alternatives, they would be required to be provided with specific cautionary language. 

In the sponsor’s words: “Americans invest to secure a brighter future for themselves and their families, not to bankroll Democrats’ radical initiatives and pet projects. The Biden administration’s policies have driven our economy into the ground. ESG investing only makes matters worse by putting the hard-earned savings of millions of Americans in jeopardy. Our bills are focused on rolling back Biden’s destructive ESG rule and protecting the financial future of working Americans, retirees, and their families.” 

Protecting Americans' Investments from Woke Policies Act (H.R. 5339, introduced September 5, 2023 as the Roll back ESG To Increase Retirement Earnings Act (RETIRE Act))

Sponsor: Allen (R-GA)

Co-sponsor: Houchin (R-IN) 

Final status: Passed in the House, September 17, 2024 (214 Republicans and 3 Democrats voted in favor); referred to the Senate Committee on Banking, Housing, and Urban Affairs, September 18, 2024.

Stated purpose: Amend ERISA to specify requirements concerning the consideration of pecuniary and non-pecuniary factors.

Selected provisions:

• Roll back ESG To Increase Retirement Earnings Act (RETIRE Act):
  • A fiduciary would be considered to be acting solely in the interest of plan participants and beneficiaries only if its actions are based only on pecuniary factors. The fiduciary would not be permitted to subordinate the interests of participants and beneficiaries to other objectives and would not be permitted to sacrifice investment return or take on additional investment risk to promote non-pecuniary benefits or goals. 
  • If a fiduciary is unable to distinguish between investment alternatives or courses of action solely on the basis of pecuniary factors, it would be permitted to use non-pecuniary factors as the deciding factor, subject to specified documentation requirements.
• Incorporates H.R. 5337 (Retirement Proxy Protection Act), H.R. 5338 (No Discrimination in My Benefits Act) and H.R. 5340 (Providing Complete Information to Retirement Investors Act). These Acts are discussed earlier in this post.

In the sponsor’s words: “By empowering financial advisors to invest retirement savings in risky, climate-related ESG funds, the Biden-Harris Administration is hijacking Americans' hard-earned money in favor of their widely unpopular rush-to-green agenda. While families continue to struggle to afford the basics under this Administration's costly policies, the last thing they need is for their retirement savings to be depleted due to politically motivated mismanagement. That is why I introduced today's legislation to ensure workers, retirees, and families have confidence that their retirement security is protected, not jeopardized for political purposes.” 

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