The U.S. House of Representatives today passed legislation that aims to codify that those managing other individuals’ retirement savings under ERISA must prioritize maximizing returns for a secure retirement, rather than prioritizing political or social impacts through the use of environmental, social, and governance (ESG) factors that may be considered risky.
H.R. 2988, the Protecting Prudent Investment of Retirement Savings Act, passed the House by a vote of 213-205. The bill was introduced by Representative Rick W. Allen (R-GA), Chairman of the Subcommittee on Health, Employment, Labor, and Pensions, earlier this year.
“Passage of the Protecting Prudent Investment of Retirement Savings Act delivers a significant win for retirees and families across the country. Under the Biden-Harris Administration, Americans’ hard-earned savings were put at risk for the sole purpose of appeasing left-wing environmentalists through risky ESG funds. Those days are over,” said Rep. Allen. “H.R. 2988 ensures that retirement plan sponsors make investment decisions exclusively based on economic factors and financial returns—protecting the retirement security of those saving for a brighter future.”
“This legislation reaffirms a simple principle we should all agree on—fiduciaries must act in the best financial interests of workers and retirees.”
Rep. Tim Walberg (R-MI)
The Education and Workforce Committee advanced H.R. 2988 on June 25, 2025, setting the stage for today’s passage by the full House. In the 118th Congress, the House also passed similar legislation championed by Congressman Allen, but the bill died in the Democrat-controlled Senate.
“This legislation reaffirms a simple principle we should all agree on—fiduciaries must act in the best financial interests of workers and retirees. I’m proud to support Rep. Rick Allen’s bill and urge the Senate to advance this measured, responsible approach to protect retirement security,” said Education and Workforce Committee Chairman Tim Walberg (R-MI).
“It’s common sense: Retirement plan managers should be solely focused on delivering maximum returns for the men and women who rely on them, not advancing a radical political agenda,” said House Majority Leader Steve Scalise. “I’m grateful to Rep. Allen for bringing this legislation to protect Americans’ retirement funds by ensuring retirement plan managers base investment decisions on economic factors, not ESG considerations, and am pleased to see it pass the House.”
What H.R. 2988 does:
• Clarifies that financial institutions must base decisions on an investment solely on economic factors.
• States that the decision to exercise a shareholder right is subject to the prudence and loyalty duties under ERISA.
• States that proxies held by ERISA plans must be voted in the economic interest of the plan, not used to advance radical policies.
• Declares that race, color, religion, sex, or national origin may not be taken into consideration when selecting a fiduciary, counsel, employee, or service provider of an ERISA plan.
• Implements a notice requirement on defined contribution plans explaining the difference between choosing from investments selected by ERISA fiduciaries and choosing from investments through a brokerage window.
ESG battle background
The ESG rule battle centers on whether—and how—retirement plan fiduciaries may consider environmental, social, and governance factors under ERISA.
Back in 2022, then-President Biden’s Department of Labor finalized a rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” that allowed financial advisors to invest Americans’ retirement savings into ESG funds. Despite bipartisan and bicameral disapproval in the form of a Congressional Review Act resolution that passed both the House and Senate, Biden vetoed the resolution in March of 2023 in a move that was supported by the American Retirement Association and the Defined Contribution Institutional Investment Association (DCIIA).
Congress was unsuccessful in a March 2023 attempt to override Biden’s veto.
Currently, the Senate is already considering the “Restoring Integrity in Fiduciary Duty Act,” reintroduced late last October by Sens. Bill Cassidy (R-LA) and Jim Banks (R-IN), which would systemize Trump-era regulation that mandates employers under ERISA to consider only “pecuniary,” or financial, factors when choosing investments.
That Senate bill and H.R. 2988 that just passed the House are both part of a broader Republican legislative agenda to reinforce traditional ERISA fiduciary duties and restrict the use of ESG/non-pecuniary considerations in retirement plan investing. Their language and specific provisions vary, but their essential objectives—centering fiduciary decisions on pecuniary financial interests—are aligned.
• Watch Congressman Allen’s remarks regarding H.R. 2988 on the House floor HERE.
• A fact sheet on H.R. 2988 can be found HERE.
SEE ALSO:
• Reintroduced Bill Would Replace Biden-Era ESG Regulation
• Trump Signs EO Challenging Proxy Advisors Promoting ESG, DEI Investing
• Biden Veto Preserves Labor Department’s ESG Final Rule