ESG Disclosure Bill Passes By One Vote
By a very slim margin, the House passed a bill that would require publicly traded companies to disclose how environmental, social and governance (ESG) measures affect their business strategy.
the Law on the improvement of corporate governance and investor protection was passed by the House generally along party lines by a 215-214 vote, with the vast majority of Democrats supporting the bill, while all Republicans voted against.
The bill, also known as HR 1187, would require the United States Securities and Exchange Commission (SEC) to issue rules defining ESG measures and would require publicly traded companies to disclose and describe to shareholders. and to the SEC how these measures affect their business strategies. Under the bill, the SEC would establish a standing advisory committee known as the Sustainable Finance Advisory Committee, which would be made up of up to 20 members, each for a four-year term, who would advise the regulator on sustainable finance issues.
The committee would be required to submit a report to the SEC no later than 18 months after the date of its first meeting that identifies the challenges and opportunities for investors associated with sustainable finance. It would also recommend policy changes to “facilitate the flow of capital towards sustainable investments, in particular environmentally sustainable investments”.
The committee would be made up of individuals and entities with an interest in sustainable finance, such as experts in sustainable finance, financial infrastructure operators and entities that provide analysis, data or methodologies that facilitate finance. sustainable.
“The information from ESG disclosures will help investors better understand what companies are doing to reduce their carbon footprint and address important issues such as climate change, diversity and labor rights,” said Juan Vargas, D- California, which sponsored the bill. , said in a statement. “My bill will help ensure the clarity and comparability of the disclosure of company practices, by developing a comprehensive and essential ESG disclosure framework. “
In his objection to the proposed legislation, Bill Huizenga, R-Michigan, a senior member of the Financial Services Committee, accused Democrats of “seeking to hijack our securities laws to push left-wing political and social agendas.” , adding that the bill “will increase costs for state-owned enterprises. However, the Congressional Budget Office (CBO) estimates the cost to the government of implementing the bill over the 2021 to 2026 period would be negligible, as the fees the SEC collects to offset its annual appropriations would cover most of the $ 6 million in costs to issue bonds. rules and support the advisory committee.
The Biden administration backed the bill, saying it “supports efforts to account for climate risk in financial services, to empower and protect investors, and to promote transparency, accountability and accountability. equity in corporate governance “.
However, the bill could struggle to make it to President Joe Biden’s desk if it needs 60 votes to pass in the Senate. According to a tax alert Ernst & Young, Democrats could include some disclosures in a 51-vote budget reconciliation bill, but said “their lack of substantial revenue or spending effects could subject the provisions to challenge and the removal of such a bill under the “Byrd Rule.” ”The Byrd Rule restricts what can be included in reconciliation legislation (which only requires a 51-vote majority) in the Senate.
Canadian Pension CEOs Call for Increased ESG Disclosure
Europe’s “ambitious plans” for ESG disclosure rules
ESG disclosure lags investment in Asia-Pacific
Tags: CBO, Congressional Budget Office, Corporate Governance Improvement and Investor Protection Act, Disclosure, environment, Ernst & Young, ESG, EY, Gouvernance, HR 1187, Juan Vargas, SEC, social