ESG Act of 2025

Key Points

• The bill requires financial advisers and brokers to base investment advice on pecuniary (profit and risk related) factors first, and blocks them from weighing social or environmental goals unless the client agrees in writing.
• If a client opts in to ESG-style investing, the adviser must disclose expected costs upfront and later show the client how the investment actually performed compared to a normal benchmark, over a period of up to three years.
• The SEC must study how often local governments disclose climate change and environmental risks when they issue municipal bonds, and report the findings and any financial risks to Congress within a year.
• The SEC must also study rules meant to stop pay-to-play arrangements in municipal bond business, including whether those rules unfairly burden small businesses or minority- and women-owned firms.
• The SEC has 12 months after the bill becomes law to write rules putting the new pecuniary-factor standard into effect, and the standard applies to adviser conduct starting 12 months after enactment.