Dive Brief:
- Congressional Democrats called on the House and Senate Committee Appropriations Committee last week to drop any policy rider that would restrict investors’ access to information about climate and supply chain risks of publicly traded companies and interfere with investment decisions.
- The letter was spearheaded by Sen. Sheldon Whitehouse of Rhode Island and Reps. Sean Casten and Juan Vargas, of Illinois and California, respectively, and signed by 62 other Democratic lawmakers. The legislators said anti-ESG riders are “contrary to what the American public wants” as a majority of voters oppose Congress imposing limits on information about corporations’ business records that is disclosed to pensions and retirement fund managers, investors and the public.
- The lawmakers said the riders follow a “dangerous trend of political interference with investing choices at the state level that are antithetical to the free-market system.” The FY 2024 House appropriations bills currently have five anti-sustainable investing riders, according to the letter.
Dive Insight:
The letter said the House FY 2024 appropriations bills include the following “controversial partisan policy riders”: The Federal Employee Benefits Environmental, Social, and Governance (ESG) Investing Rider; the Climate Disclosure Rider; the ESG Retirement Investing Rider; the Defense Contractor Climate Emissions Rider and the ESG Rider.
The riders, though spread out across multiple department bills, seek to limit access to financially material ESG data such as climate-related disclosures — greenhouse gas emissions and environment-related financial risks — and prohibit funding for the promotion of ESG investments and any contributions made to such investments.
The climate disclosure rider, which is mentioned in the Financial Services and General Government Appropriations Act, also blocks funds being made available to “ finalize, implement, or enforce” the Securities and Exchange Commission’s proposed climate disclosure rule or any “substantially similar rule.”
“To protect the annual appropriations process from extremist culture wars that cost our constituents their hard-earned savings and safeguard our free markets, we urge you to finalize FY 2024 appropriations bills without these dangerous political riders,” the lawmakers wrote.
The letter also noted, due to an increase in demand for more transparency from investors, many publicly traded companies report their climate disclosures and asset managers around the world track such information closely. The rise in demand for such data has also triggered a push for sustainability reporting regulations and frameworks. The European Union’s Corporate Sustainability Reporting Directive went into effect this year, while the SEC’s climate disclosure rule is expected to be finalized in April. Additionally, global ESG reporting frameworks have coalesced around standards from the International Sustainability Standards Board and the Global Reporting Initiative.
This isn’t the first time Democratic lawmakers have pushed for climate action and ESG-related disclosure rules. Last year, Democratic senators pressed SEC Chair Gary Gensler to expedite the release of the Human Capital Management Disclosure rule — which requires companies to report on employee compensation, benefits, demographics, turnover data and more — after the agency released its regulatory agenda.
The request to accelerate the rule’s release came shortly after Congressional Democrats called on President Joe Biden to strengthen the nation’s position in the “international fight against the climate crisis” and take initiatives that ensure the country remains on target for a “livable future.”
The Nov. 30 letter urged the president to support stronger national climate commitments aligned with the Paris Agreement, negotiate a full phase-out of fossil fuels and establish stronger standards to prevent financing for international fossil fuel projects.
