The House Financial Services Committee late Thursday advanced four bills along party lines aimed at combating the influence of environmental, social and governance investing in the nation's financial markets.
The four bills, which were announced Tuesday by Republicans on the committee, were approved in respective 29-21 votes with all committee Democrats dissenting.
One of the bills, the Guiding Uniform and Responsible Disclosure Requirements and Information Limits Act, or GUARDRAIL Act, is in direct response to the Securities and Exchange Commission's public company climate disclosure proposal. The SEC proposal, unveiled in March 2022, would require public companies to disclose a host of climate-related information in their registration statements and periodic reports.
The GUARDRAIL Act would, among other things, stipulate that companies are required to disclose only material information, which under the bill does not include climate-related information, and require the SEC to publicly list and explain any non-material disclosure demands.
Rep. Bill Huizenga, R-Mich., the bill's sponsor, prior to Thursday's vote said the SEC's proposal would drive up costs for businesses and hurt workers saving for retirement. SEC Chairman Gary Gensler's "rush to upend our capital markets at any cost should be concerning to everyone in this room," Mr. Huizenga said.
Democrats largely support the SEC proposal and Rep. Sean Casten, D-Ill., co-chairman of the Congressional Sustainable Investment Caucus, said the bill is anti-free market and is in opposition to what investors want. "We are going to continue to lament the fact that actually looking out for free markets, no matter how many pretty words you put around it, is partisan in this town today, and it makes me sad," he said just prior to the committee's vote. "I hope when folks are ready to come back to the light and start growing our economy, we start by opposing this bill."
The committee also approved the Businesses Over Activists Act, which would clarify that the SEC does not have the power to regulate shareholder proposals and would prevent the agency from forcing companies to include or discuss shareholder proposals. Its goal is to limit the SEC's control in this area and emphasize the role of state regulations in governing shareholder proposals, according to a committee news release.
Shareholders can file proposals before a company's annual meeting. If a company thinks a proposal is out of bounds or has already been addressed, it can file a no-action letter with the SEC, requesting permission not to include the proposal in its proxy statement.
Another bill advanced Thursday, the Protecting Americans' Retirement Savings from Politics Act, includes provisions that would raise the resubmission thresholds for shareholder proposals and allow companies to exclude environmental, social and political proposals. It would also require large asset managers to conduct an economic analysis when voting against board recommendations and compel investors to consent to the use of non-pecuniary factors in decision-making.
Also, the committee supported the American Financial Institution Regulator Sovereignty and Transparency Act, or American FIRST Act, which would increase transparency and congressional oversight of federal banking regulators and their interactions with international organizations, particularly non-governmental organizations, to limit their influence on U.S. banking policy.
Separately on Thursday, the committee in a 34-16 vote advanced a bill dealing with cryptocurrency — the Clarity for Payment Stablecoins Act of 2023 — to establish a "clear regulatory framework for the issuance of payment stablecoins," according to the committee news release.
Each of the bills will now head to the full House for consideration.
