The US House of Representatives recently passed a major ESG reform bill, which will be sent to the Senate. By a vote of 217-206, the House of Representatives introduced a series of bills to combat environmental, social, and governance (ESG) finance, with three Democrats joining the slim Republican majority.
This came as members of the House Financial Services Committee concluded their much-anticipated “anti-wake week,” a series of ESG-related hearings and floor votes on bills to counter pro-ESG regulations.
Particularly starting in 2021, Republican lawmakers are developing multiple bills to counter the negative effects of some ESG rules and “woke” investment regulations enacted under President Joe Biden.
Below are some of the most important measures advanced in the bill package.
Prioritize economic growth over the Awakening Policy Act. This measure (HR 4790) provides a direct legal check on mandatory ESG reporting regulations. The bill would prevent the Securities and Exchange Commission from forcing publicly traded companies to disclose non-material information about board diversity or climate change risks. It also protects companies from personal liability for disclosure of non-material information under SEC policy.
The bill would allow companies to retain independent judgment regarding risk considerations, and companies would be free to voluntarily disclose non-financial risks if management determines that they are material. It becomes like this. One of the biggest arguments against the challenges of the SEC’s climate change disclosure rules is that Congress did not explicitly authorize the SEC to promulgate non-financial disclosure requirements.
Rep. Andy Barr (R-Ky.) made this point before all five SEC commissioners during a key hearing of the House Financial Services Committee. Barr said two climate disclosure bills were introduced in the 116th and 117th Congresses that would give the SEC legal authority to accept non-material environmental disclosures. However, the Business Improvement and Investor Protection Act and related bills were rejected in the Senate. This means that Congress never gave the SEC the powers it claims.
Protect Americans’ investments from wake policy laws. This bill (HR 5339) counters the Department of Labor’s (DOL) ESG-based pension policies that impose additional investment standards on retirees. The Biden DOL’s rule, “Prudence and Fidelity in the Selection of Plan Investments and the Exercise of Stockholder Rights,” protected private pension fund beneficiaries under the Employee Retirement Income Security Act of 1974, which Trump said It nullified two rules of the era. This ensures that the plan trustee only considers the financial aspects. Non-political factors in making investment decisions that affect a client’s retirement account.
ESG screening by executives removes politically unfavorable but otherwise profitable industries, such as fossil fuels and weapons manufacturing, from retirees’ portfolios. The measure would abolish that and only allow consideration of non-financial factors in limited circumstances, such as when fund managers are “unable to differentiate between investment options based solely on financial factors.”
The goal, said Rep. Rick Allen (R-Ga.), is to ensure that hard-earned retirement savings are not “depleted by politically motivated mismanagement.”
Anti-discrimination laws in my benefits. Similar to the above protections for ESG standards in retirement plans, this bill (HR 5338) ensures that fiduciaries who manage funds are not selected based on diversity, equity, and inclusion (DEI) criteria. Masu. This law requires consideration of “race, color, religion, sex, or national origin” in the selection of advisors, legal advisors, health care providers, or employees authorized to administer a private retirement plan. It is prohibited to do so.
House Republicans have also introduced complementary legislation to protect private retirement benefits, such as HR 5337. This prevents abuse of proxy voting rights extended to plan fiduciaries. They would only be able to vote on behalf of their customers on measures that advance the economic interests of the plan.
The Republican package of ESG bills was advanced shortly after the ESG Working Group released its final report on ESG in August. The final report was prepared based on the initial findings of the 2023 interim report. The task force anticipates the following key policy priorities for the 119th Congress:
“Strengthening accountability in shareholder voting by aligning voting decisions with shareholder economic interests.” “Reform the voting system to protect the interests of individual investors.” “Strengthening transparency and oversight of large asset managers to ensure their operations reflect the financial interests of retail investors.”
While we can quibble over the details, it’s encouraging to see that Congress is pursuing investment and retirement security for hard-working Americans. Now, that fire has been passed to the Senate to restore some measure of financial health to a federal regulation that is important to so many people.
