Legislation requiring public companies to disclose ESG metrics and the impact they have on long-term business strategy was approved Friday by the House Financial Services Committee.
The bill would also create a Sustainable Finance Advisory Committee at the Securities and Exchange Commission to recommend the types of environmental, social and governance disclosure that should be required.
H.R. 4329, the ESG Disclosure Simplification Act of 2019 sponsored by Rep. Juan Vargas, D-Calif., also calls for the advisory committee to report on challenges and opportunities for investors in sustainable finance and to recommend policy changes to encourage that investment.
Heather Slavkin Corzo, head of U.S. policy for the Principles for Responsible Investment, whose 2,500 signatories represent $86.3 trillion in assets, welcomed the legislation in a statement. "The SEC's reporting requirements are outdated and out of step with the modern global economy. Investors deserve full transparency on how companies approach ESG issues, which are material to their long-term success."
House passage of the bill, which is expected largely along party lines, can help bring the SEC's reporting requirements into the 21st Century, said Ms Slavkin Corzo, a former director of the AFL-CIO Office of Investment.
The House Financial Services Committee also approved legislation that would require public companies to disclose the ratio between executive and median employee pay raises. Another bill referred for a House floor vote would overturn the Supreme Court's decision in Kokesh vs. SEC, which limited SEC disgorgement actions to a five-year statute of limitations. The SEC estimates that investors have lost out on $800 million in restitution because of that court decision.