"It's time to get politics out of corporate boardrooms and discourage financial regulation from being weaponized to drive far-left environmental and social policy," Chairman Patrick McHenry, R-N.C., said in his opening statement Wednesday.
Several GOP committee members argued that the SEC has overstepped its authority in issuing its SEC climate disclosure proposal, which requires public companies to disclose a host of climate-related information in their registration statements and periodic reports.
"We believe the SEC, as a government institution, is abusing the discretion delegated to it," Rep. Pete Sessions, R-Texas, said.
Meanwhile, ranking member Maxine Waters, D-Calif., said, "Investors want this information because it's good for the performance of their investments, which is also good for society. That's as capitalist and as American as it gets."
Other Democrats made similar comments during the hearing.
"If it's partisan to defend free markets and competitive and investor rights, let's double down on the partisanship, because it's the only way we move forward as a country," said Rep. Sean Casten, D-Ill.
In January, Mr. Casten announced the launch of the Congressional Sustainable Investment Caucus, which he co-chairs with Rep. Juan Vargas, D-Calif., to inform policy related to ESG investing.
In an outdoor press conference after the hearing, Mr. Casten said that Republicans' anti-ESG efforts are trying to restrict what pension funds can invest in. "That ain't capitalism," he said. "That is stupidity."
One of the main arguments that GOP lawmakers have made against the SEC climate disclosure rule is that it would negatively impact small businesses.
When asked how he would respond to that argument, Mr. Casten said there is concern on both sides of the aisle about greenwashing, or the practice of misleading investors about a company's environmental impact.
"What the SEC is trying to do is create a consistent set of rules … for how we report carbon emissions and how we report your exposure to carbon emissions," he said.
He added that because the European Union has taken steps toward requiring ESG disclosures, multinational corporations will have to come into compliance with those regulations regardless of the SEC rule.
Ahead of the hearing, US SIF: The Sustainable Investment Forum, Ceres, Interfaith Center on Corporate Responsibility, and the US Impact Investing Alliance sent a letter to the leaders of the committee defending the ESG movement and calling it a "mainstream investing practice."
"Both professional investors and everyday, hard-working Americans want to align their investments with critical ESG criteria to minimize long-term risks to their investments and maximize returns," the organizations wrote.