Guiding Uniform and Responsible Disclosure Requirements and Information Limits Act of 2023

Floor Speech

Mr. Speaker, we are on the brink of yet another government shutdown brought to you by MAGA Republicans. I have lost track of how many times this has happened in this Congress. Frankly, I and the rest of America are just tired. We are exhausted.

There are real consequences when the government shuts down. It harms our national security. It harms our economy. It harms servicemembers, veterans, retirees, and vulnerable communities.

Instead of working to prevent a shutdown, we are debating a bill that seeks to divide America with fake culture wars that are really about denying the real dangers posed by climate change and denying the fact that our country's rich diversity is one of our greatest resources.

This bill, H.R. 4790, which I am calling the promoting MAGA priorities over economic growth act, is straight out of the Republicans Project 2025 playbook. It would restrict voting rights for investors, ban information that MAGA Republicans don't agree with, and block the government agency responsible for protecting our capital markets, the Securities and Exchange Commission, from directing public companies to report critical information that impacts their bottom line, including climate risk, company diversity, and employee welfare.

This bill flies in the face of the 80 percent of investors who want companies to disclose these metrics, known as environmental, social, and governance, or ESG, policies. Companies that prioritize these metrics perform better financially than their peers that do not.

Many studies have shown that companies that embrace the diversity of the United States outperform those that do not. Indeed, companies with the highest percentages of women board directors outperformed those the least by 53 percent when it comes to shareholder returns.

If we think about it, this is just common sense. When a company includes the views and perspectives that reflect the diversity of America, all of America is likely to see the value of that company.

When I was chairwoman of the committee, I created the first of its kind Subcommittee on Diversity and Inclusion. We received countless hours of testimony from researchers who confirmed that embracing diversity and inclusion is not just the right thing to do but is also good for the bottom line. It is good management.

Let me go through in more detail what this bill does.

First, H.R. 4790 strips American investors of their legal right to vote on and offer proposals that can influence the direction of the companies they own, particularly those related to ESG policies. The bill does this by giving management, rather than the SEC, the final say on whether a proposal gets included on the ballot at a company's annual shareholder meeting.

The effect of this bill would deprive investors of what is today, right now, a legal right to have proposals of any kind included.

There is a long history of shareholders pushing America's corporations to adopt practices that most of us take for granted today. This includes majority-independent boards, say-on-pay executive compensation, and annual director elections.

Today, investors are pushing companies to report ESG metrics, board diversity, and how workers are treated. Being able to offer, and then vote on these proposals, is a legal right of investors under current law. That is right. Shareholders are the legal owners of the companies they invest in and corporate executives work at their pleasure.

Mr. Speaker, it seems that my colleagues on the other side of the aisle, who are so concerned about socialism, might need a refresher about how capitalism really works.

Second, H.R. 4790 undermines another critical component of our equity markets. The bill limits independent analysis and research by impeding key providers that investors use known as proxy advisers.

Proxy advisers are neutral third parties that provide shareholders and their representatives with independent analysis about items that are up for a vote on the corporate ballot. Proxy advisers also solve an important problem by doing the research on thousands of corporate votes that investors would otherwise have to do themselves. Management simply does not want ordinary investors to have this information as it may not align with their recommendations.

To be clear, investors pay for these services and do so because they don't just want to take management's word, and they shouldn't. By restricting what analysis and research ordinary investors can purchase and use, H.R. 4790 is effectively another MAGA book ban.

Third, H.R. 4790 severely limits the SEC's authority to direct companies to report data about their climate risks, diversity hiring, and employee welfare.

Instead of allowing the SEC to determine what information investors should see, as is currently settled law, under this bill, companies themselves would make this determination.

It shouldn't surprise anyone that a company's management is not inclined to share more than it has to, and if it gets too close, one can imagine that companies wouldn't share much of anything.

Congress authorized the SEC to be the arbiter of what is disclosed because our markets only work when investors--investors--have sufficient information to make informed investment decisions.

Finally, H.R. 4790 undermines the government's ability to coordinate with international partners and take commonsense steps to address financial risks like those posed by climate change. In fact, if the Federal Reserve hears from a European counterpart that requiring companies to guard against wildfire risk is important, the Fed would have to jump through several new hurdles before it could implement it, even in an emergency.

This extreme measure would even make it harder for our bank regulators to encourage banks to expand small business lending, an issue I tried to fix through an amendment but was blocked.

To be clear, this bill doesn't just have one or two poison pills in it. When each bill was separately considered in committee, not a single Democratic member voted for them.

H.R. 4790 strips the right of investors to vote and offer their own proposals to strengthen the companies they own, strips their access to independent research and analysis about the companies they own, and strips the government regulator of its authority to compel those companies to provide the market with critical information.

Is this America?
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Ms. WATERS. Mr. Chairman, I yield 3 minutes to the gentleman from California (Mr. Sherman), who is also the ranking member of the Subcommittee on Capital Markets.

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Ms. WATERS.
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Ms. WATERS. Garcia), who is also the vice ranking member of the Committee on Financial Services.
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Ms. WATERS. Tlaib), who is also the vice ranking member of the Subcommittee on Housing and Insurance.

Mr. Speaker, let me be clear. We all want our investments to grow. Investors want to be able to compare ESG metrics across companies because there is substantial research showing that companies that are actively managing their climate risk and promoting diversity, equity, and inclusion are more profitable, not less.

Consistent and transparent disclosure on these metrics are critical for investors who are looking to maximize their investment growth, not just for investors who are looking to put their money toward good causes.

This is not just about doing the right thing for the Earth or for employees. It is about doing the right thing for a company's bottom line, the right thing for the growth of our investments, and the right thing for investor choice.

My colleague has claimed that nothing in this bill would prevent an individual from investing in companies with ESG policies, but let's take a look at the facts.

This bill would make it harder for investors to access clear and consistent disclosures from companies on ESG metrics.

How can an investor make informed decisions without that information? They cannot, and that is why this bill is so harmful.

It is taking away investor rights and investor choice in order to force MAGA policies on all of us at the expense of investors. It is unacceptable.

Mr. Speaker, this bill has been opposed by the Biden-Harris administration. In fact, this Statement of Administration Policy states that this bill ``would severely limit the ability of Federal financial regulators to protect consumers and investors.''

It also ``would disempower stakeholders and investors. . . .''

I include the Statement of Administration Policy in the Record. Statement of Administration Policy h.r. 4790--prioritizing economic growth over woke policies act

The Administration opposes H.R. 4790, which would severely limit the ability of Federal financial regulators to protect consumers and investors.

Since 1934, the Securities and Exchange Commission (SEC) has worked to protect investors, safeguard markets, and enhance access to capital. Central to these efforts are the SEC's disclosure rules, which require companies that offer securities to the public to provide investors the information they need to make informed decisions. The changes proposed in H.R. 4790 would fundamentally limit the SEC's ability to fulfill its mission by prohibiting the agency from requiring companies to provide certain disclosures of information material to investment decisions, and instead allowing the regulated companies themselves the discretion to determine what must be disclosed.

The SEC also exists to ensure that companies are responsive to shareholder and investor concerns. However, H.R. 4790 would disempower stakeholders and investors, including by preventing the SEC from compelling companies to notify investors of other shareholders' proposals and by limiting the types of proposals that shareholders can introduce.

Finally, the bill also limits some independent agencies, including the Federal Reserve, from working to influence standards proposed by specified international organizations that work to improve the financial system, curtailing the Nation's ability to coordinate with international counterparts in the face of threats to the global economy.

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Ms. WATERS. Mr. Speaker, I also point out that this bill is opposed by over 40 organizations and investor advocates. I include in the Record the letter these groups signed indicating their opposition to H.R. 4790. September 17, 2024. Re Opposition to anti-ESG bills that threaten workers' retirement security and our financial system, and weaken tools of corporate accountability. Hon. Mike Johnson, House of Representatives, Washington, DC. Hon. Hakeem Jeffries, Minority Leader, House of Representatives, Washington, DC.

Dear Speaker Johnson and Minority Leader Jeffries: Americans for Financial Reform (AFR) and the 39 undersigned organizations write in opposition to Prioritizing Economic Growth Over Woke Policies Act (H.R. 4790) and the Protecting Americans' Investments from Woke Policies Act (H.R. 5339), which are packages of several bills that are part of a broader, unpopular campaign against common sense investment practices. This campaign seeks to both force financial actors to ignore a slew of financial risks to the detriment of workers' retirement security and the integrity of our financial system, and weaken tools of corporate accountability. The bills at issue were marked up by the House Financial Services Committee (HFSC) and the House Committee on Education and the Workforce. If passed, they would represent a giveaway to corporations at the expense of workers, investors, and the public.

The bills marked up by HFSC in July of last year were the culmination of what the committee's majority publicly characterized as ``ESG month''--a series of six hearings and a markup designed to discourage financial actors from taking into account environmental, social, and governance (ESG) factors in their investment decision-making and undermine corporate accountability. The bills can be categorized based on the effects they would have: (1) undermine regulations that would equip investors with more information to make better investment decisions (H.R. 4790); (2) insulate the management of public companies from investor input and accountability, including by eliminating fundamental investor rights to file shareholder proposals (H.R. 4767 and H.R. 4655); and (3) hamstring the ability of federal banking regulators to respond effectively to micro- and macro- prudential risks to the financial system (H.R. 4823). For a more detailed discussion of these bills, see AFR's letter of opposition submitted ahead of the markup.

The bills marked up by the House Committee on Education and the Workforce in September would amend the Employee Retirement Income Security Act (ERISA) with the effect of undermining workers' retirement security. Two of the bills-- H.R. 5339 and H.R. 5337--have a longer history, mirroring two Trump-era Department of Labor (DOL) rules. Those rules were widely criticized and have since been rescinded because they produced significant confusion about what fiduciaries are allowed to consider when making investment decisions, and had a chilling effect on the consideration of financially relevant information--thereby putting workers' retirement security at risk. The other two bills would also harm workers saving for retirement, H.R. 5338 by interfering with efforts to increase diversity among asset managers managing workers' savings and H.R. 5340 by mandating confusing and misleading information be sent to investors. For a more detailed discussion of these bills, see AFR's letter of opposition submitted ahead of the markup.

Congress should not lend support to an effort that would harm the public interest and has triggered fierce and effective opposition from a broad coalition of diverse stakeholders. For example, state-level anti-ESG legislation-- which included 161 pieces of legislation introduced in 28 states this year--faced significant pushback from public pension beneficiaries, retirement system officials, bank and local business associations, and unions. As a result, the vast majority of the bills were defeated. A strong coalition has also opposed past anti-ESG congressional actions.

Voters overwhelmingly oppose measures like these. Although the anti-ESG campaign is well-funded, polling decidedly shows a strong majority of voters do not support its goals. For example, 63% of voters do not believe the government should set limits on corporate ESG investments. And when it comes to how companies should operate in our society, ``most voters (76%) feel companies play a vital role in society and should be held accountable to make a positive impact on the communities in which they operate.'' This includes both the majority of Republicans (69%) and the majority of Democrats (82%), reflecting strong bipartisan support. Additionally, a recent poll by Public Citizen found that voters oppose Congress passing legislation to limit the type of information about a corporation's business record that is disclosed to pension and retirement fund managers, investors, and the public, and that voters would reward an elected official who favors requiring corporations to disclose environmental, social, and governance information about their business dealings to investors and the public.

For all the reasons stated above, the undersigned organizations urge you to oppose these anti-ESG bills. Thank you for your consideration of our perspective. Please do not hesitate to contact Natalia Renta if have any questions. Sincerely,

Americans for Financial Reform; 17 Communications; 350.org; Adrian Dominican Sisters, Portfolio Advisory Board; AFL-CIO; Alabama Interfaith Power & Light; American Federation of State, County and Municipal Employees (AFSCME); American Federation of Teachers; Center for Popular Democracy; ClientEarth USA; Communications Workers of America; Congregation of St. Joseph; Daughters of Charity, Province of St. Louise.

Environmental Defense Fund; For the Long Term; Global Reporting Initiative (GRI); Green America; Interfaith Center on Corporate Responsibility; International Brotherhood of Teamsters, Invest Vegan; League of Conservation Voters; Majority Action; Mercy Investment Services, Inc.; National Education Association; National Women's Law Center; NETWORK Lobby for Catholic Social Justice; Oxfam America.

Private Equity Stakeholder Project; Public Citizen; RFK Human Rights; Rhia Ventures; Rise Economy (formerly California Reinvestment Coalition); Sierra Club; SOC Investment Group; Stance Capital; Strong Economy For All Coalition; Take on Wall Street; The People's Justice Council; Tulipshare, Sustainable Investment Fund; Unlocking America's Future.

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Ms. WATERS.

Mr. Speaker, we have talked a lot during this debate about investors, and I want to be clear that when I say ``investor,'' I am talking about people saving for retirement, their children's education, and to purchase a home. I am talking about Americans who have saved a few dollars in a mutual fund or purchased a few stocks.

These are the investors, and it is their rights that this bill tramples on. It tramples on their right to vote on and to offer proposals to strengthen companies they own, their right to information to evaluate their investment, and it undermines the regulator who works to protect investor rights.

This is taking us back. This is undoing the traditional investor rights that we have enjoyed for so long that are now being stripped while there is an attempt to undo what we are trying to do with climate change.

Well, I know that they don't believe in the science and what is happening with climate change, but this is going way beyond what I thought any of my colleagues on the opposite side of the aisle would do.

I understand that large public corporations want this bill because it would allow them to take investors' money but ignore them in every respect.

Shareholders are the legal owners of these companies, not the executives. Mr. Speaker, I think the executives simply forgot who they work for.

The shareholders are the ones who invest their hard-earned dollars in the company and deserve the right to participate in this small way.

This bill is a blatant denial of climate change and insulting to communities all across this country that have been burned by historical wildfires, flattened by monster hurricanes, and parched by record heat waves and droughts.

This bill is an attempt to make us see our neighbor as a threat rather than as a friend. It suggests wanting companies to reflect the diversity of America is itself un-American.

I know that there are those who don't like to see people like me in the boardrooms, who don't like to see people of color in the boardrooms, who don't like to see LGBT in the boardrooms.

We are not going back, Mr. Speaker. We are going to continue to fight this fight, and we are going to fight for the investors.

With that type of thinking, it leads the politicians to share fearmongering lies, like people eating pets rather than seeing that our diversity of people, ideas, backgrounds, and religions is our greatest strength and what sets America apart from the rest of the world.

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