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Congressman Andy Levin, D-Michigan is drafting legislation that has the potential to open the floodgates for socially responsible investments in retirement accounts.

The bills — there are two to amend existing laws — would require investment fiduciaries to take into account environmental, social and governance factors when making investment decisions.

The approach is in sharp contrast to the one adopted by the current Labor Department that recently finalized rules that make it more difficult for 401(k) plans to include ESG investments in their investment options and forbids their use as the default options in plans.

(Related: Labor Finalizes Controversial ESG Rule)

Levin’s bills, which were first reported by Investment News, would amend the Investment Advisers Act and the Employee Retirement Income Security Act (ERISA).

The Congressman, who has been mentioned as a potential candidate for Labor Secretary in the incoming Biden Administration, plans to introduce the bills — known as the Sustainable Investment Policies Act and the Retirees Sustainable Investment Policies Act — in the current Congress and again in the next one. 

“It’s much easier to pick it up in the next Congress when the wheels are already in motion,” explained a spokeswoman from Levin’s office, who also referenced the growing momentum for such legislation following the DOL’s new rule, which had faced stiff opposition.

She noted that the Levin-sponsored bills have one co-sponsor so far  — Rep. Brendan Boyle, D-Penn. — but more are expected after a Dear Colleague letter is circulated.

The market for sustainable investments is surging. Morningstar reports that a record net $20.9 billion poured into sustainable funds during the first half of 2020, which was almost as much of all of the comparable flows in 2019.

The USSIF, the Forum for Sustainable and Responsible Investment, disclosed in its 2020 Trends Report, that U.S.-based assets under management using sustainable investing strategies grew from $12 trillion at the start of 2018 to $17.1 trillion at the start of 2020, an increase of 42%.

Despite these indicators, Levin’s bills will face a  tough challenge in Congress if the Democrats don’t take control of the Senate, which depends on two runoff races in Georgia in early January.

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