Excerpts of the report follow:
Purpose and Summary...3
Background and Need for Legislation...4
Statement of Oversight Findings and Recommendations of the Committee...9
Statement of Performance Goals and Objectives...9
Committee Cost Estimate...11
Unfunded Mandate Statement....11
Application of Law to the Legislative Branch...11
Duplication of Federal Programs...11
Changes to Existing Law...11
Purpose and Summary
Background and Need for Legislation
Environmental, social, and governance (ESG) matters generally include issues relating to environmental sustainability, such as climate change; social issues such as human rights and labor practices; and governance issues such as gender, racial, and ethnic diversity at both the executive and board levels.
There is growing evidence that ESG disclosures are material to investors. In recent years, investors have increasingly been demanding more--and better--disclosure of ESG information from public companies./1/ Many investors view ESG information as important not just for evaluating reputational risks, but for evaluating companies' financial performance as well./2/ For example,
/1/See e.g., Donnelly Financial, The Future of ESG and Sustainability Reporting: What Issuers Need to Know Right Now, at 3 (
ESG factors cannot be divorced from financial analysis. We view a strong ESG record as a mark of operational and management excellence. Companies that score high on ESG measures tend to quickly adapt to changing environmental and social trends, use resources efficiently, have engaged (and, therefore, productive) employees, and face lower risks of regulatory fines or reputational damage./3/
Moreover, credit rating agencies now incorporate EGS factors into their ratings methodologies--in fact, S&P has taken over 100 rating actions based on environmental and climate concerns./4/
In recognition of the growing importance of ESG disclosures in the investment landscape, the
/5/IOSCO, Statement on Disclosure of ESG Matters by Issuers, at 1 (
/6/See id. at 1, n. 1.
/8/See id. at 13-16.
In addition, over 2,300 investment managers, asset managers, and service providers representing over
/9/PRI is a non-profit organization, originally formed by the
In testifying before the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets,
Section 1. Short title
This section states that the title of the bill is the "ESG Disclosure Simplification Act of 2019." Section 2. ESG disclosures Subsection (a) amends section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78n) by adding a new subsection (k). The new subsection (k) requires issuers that have registered securities or that file annual reports to disclose in any proxy or consent solicitation material for an annual shareholder meeting: a clear description of the link between environmental, social, and governance (ESG) metrics and the issuer's long-term business strategy; and any process the issuer uses to determine the impact of these ESG metrics on its long-term business strategy.
Paragraph (1) of subsection (b) requires the
Paragraph (2) requires that the
Paragraph (3) states that ESG metrics defined by the
Paragraph (4) allows the
Paragraph (5) allows the
Paragraph (6) allows the
Section 3. Sustainable Finance Advisory Commission This section amends section 4 of the Securities and Exchange Act of 1934 (15 U.S.C. 78d) by adding a new subsection (k). The new subsection (k) establishes a permanent advisory committee to be called the
Within 18 months after the Committee's first meeting, the Committee shall issue a report that identifies challenges and opportunities for investors associated with sustainable finance and recommends policy changes that facilitate the flow of capital towards sustainable investments, particularly environmentally sustainable investments. This
The Committee will consist of no more than 20 members, who shall each serve for one four-year term. Without representing single individuals or entities, each member will represent types of individuals and entities with similar interests in sustainable finance, such as: experts on sustainable finance; operators of financial infrastructure; entities that provide analysis, data, or methodologies that facilitate sustainable finance; insurance companies, pension funds, asset managers, depository institutions, credit unions, or other financial institutions.
Members of the Committee may not receive pay for their position on the Committee but may receive travel or transportation expenses.
The name of each member and the types of individuals and entities the Member represents shall be published on the
The term `sustainable finance' is defined as the provision of finance with respect to investments taking into account environmental, social, and governance considerations.
For the purposes of section 103(i) of
Committee Votes and Roll Call Votes
In compliance with clause 3(b) of rule XIII of the Rules of the
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Statement of Oversight Findings and Recommendations of the Committee In compliance with clause 3(c)(1) of rule XIII and clause 2(b)(1) of rule X of the Rules of the
Statement of Performance Goals and Objectives
Pursuant to clause (3)(c) of rule XIII of the Rules of the
New budget Authority and CBO Cost Estimate Pursuant to clause 3(c)(2) of rule XIII of the Rules of the
Dear Madam Chairwoman: The
If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact is
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
H.R. 4329 would require the
Using information from the
By requiring publicly traded companies to disclose ESG metrics to shareholders and the
The bill contains no intergovernmental mandates as defined in UMRA.
The CBO staff contacts for this estimate are
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the
Unfunded Mandate Statement
Pursuant to Section 423 of the Congressional Budget and Impoundment Control Act (as amended by Section 101(a)(2) of the Unfunded Mandates Reform Act, Pub. L. 104-4), the Committee adopts as its own the estimate of federal mandates regarding H.R. 4329, as amended, prepared by the Director of the
H.R. 4329 establishes a sustainable finance advisory committee, which operates consistent with section 5(b) of the Federal Advisory Committee Act.
Application of Law to the Legislative Branch
Pursuant to section 102(b)(3) of the Congressional Accountability Act, Pub. L. No. 104-1, H.R. 4329, as amended, does not apply to terms and conditions of employment or to access to public services or accommodations within the legislative branch.
In accordance with clause 9 of rule XXI of the Rules of the
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
The full text of the report is found at: https://www.congress.gov/congressional-report/116th-congress/house-report/365/1?s=3&r=8