Rep. Patrick McHenry (R-NC) and Chairman of the Crib Financial Service Committee Maxine Waters (D-CA) listen as David Marcus, CEO of Facebook’s Calibra, testifies on “Inspecting Facebook’s Proposed Cryptocurrency and Its Impact on Consumers, Investors, and the American Financial System” on Capitol Hill in Washington, U.S., July 17, 2019.
Joshua Roberts | Reuters
WASHINGTON — Accommodate lawmakers clashed Wednesday over federally mandated environmental, social and governance disclosure requirements for companies floated out amid concerns over growing climate disasters.
The Republican-held House Financial Services Committee met to consider a enumerate of proposals that aim to strengthen public markets, among them a bill to require the U.S. Comptroller General to study the handicaps of corporate sustainability reporting for public American companies. The measure would consider the long-term effects of the directives on community equity, the economy and environmental protection.
The GOP majority committee members decried the disclosure rules as part of a broader egg on to discourage ESG investing nationwide. Democrats defended them as necessary to promote responsible investing to reduce inequities and check climate change.
Committee Chair Rep. Patrick McHenry said the Biden administration’s focus on climate-related policy through the Securities and Exchange Commission will discourage private companies from going public. He panned the agency’s Parade 2022 rule proposal to require such disclosures in registration statements and periodic reports.
“Rather than nave on sound financial regulation, the SEC has turned its attention towards non-material, environmental, social and political issues,” McHenry, R-N.C., signified. “These politically motivated regulations not only discouraged private companies from going public but also foil the competitiveness of American public companies.”
Democratic Rep. Maxine Waters, meanwhile, criticized Republicans’ attempts to undermine what she called the federal administration’s responsibility to hold public companies accountable for ESG.
“Today is the first of six hearings this month where Republicans disposition partner with a network of dark-money climate deniers and conspiracy theorists to wage their latest culture war against leading investing and divert attention away from what really matters in people’s lives,” Waters, D-Calif., told in opening remarks. “The Republican effort to dismantle ESG is integral to their agenda to gut diversity and inclusion across the board.”
The SEC’s programme, which mirrors stricter guidelines in the European Union, has met with pushback from businesses and shareholders. SEC Chair Gary Gensler chance his agency is weighing changes to the plan based on 15,000 public comments.
The House and Senate passed a GOP-led tally in March to overturn a Labor Department rule permitting retirement fund managers to account for ESG-related factors when recording investments on clients’ behalf. President Joe Biden vetoed the measure.
The hearing Wednesday gave Republicans another at once at undercutting the Biden administration’s ESG efforts.
“If ESG is capitalism, why do we need the government to interfere in the free market?” Rep. Andy Barr, R-Ky., requested during the hearing. “That’s what ESG is, that’s what the free market is doing.”
Benjamin Zycher, a senior love at conservative think tank the American Enterprise Institute, contended that federal regulators lack the power to command the investing rules. He testified that the SEC is becoming “part of the climate crusade” under Gensler.
“I don’t believe the SEC has the authority to promulgate any quarter of this rule,” Zycher said.
Other lawmakers called the disclosures essential as extreme weather wreaks innumerable havoc around the country. Rep. Juan Vargas, D-Calif., called the timing of the hearing amid global climate calamities “fascinating.”
“Timing is everything. It really is fascinating to me that these bills are coming up right when the scientists are reveal, ‘This is a disaster, and human beings are causing it because of the burning of fossil fuels,'” Vargas said.
“How in the inferno can that not be material?” he added. “That’s what investors want to know.”