"ESG is an evil pollutant that must be eradicated from corporations and businesses," said Rep. Ralph Norman, R-S.C., who introduced one of the bills, in a House Financial Services Committee news release. "Ultimately, the Businesses Over Activists Act would preserve the First Amendment rights of corporations and impede economic damages stemming from the misuse of resources delegated to the management of these politicized proposals. The SEC should not and does not have the authority to compel companies to include ESG proposals."
The Businesses Over Activists Act 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 the 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.
Earlier this month, Republicans held hearings on shareholder proposals and the influence of proxy-advisory firms at public company annual meetings.
Another bill floated Tuesday, 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.
The Guiding Uniform and Responsible Disclosure Requirements and Information Limits Act, or GUARDRAIL Act, would, among other things, stipulate that companies are required to disclose only material information and require the SEC to publicly list and explain any non-material disclosure demands.
Lastly, the American Financial Institution Regulator Sovereignty and Transparency Act, or American FIRST Act, 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, according to the news release.
The committee will consider the bills at a markup Thursday to conclude its "ESG month." Over the course of July, the committee, led by Republicans, has held several hearings focused on ESG.
Maria Lettini, CEO of US SIF: Sustainable Investment Forum, said in a statement ahead of Thursday's markup that ESG month "did not illuminate any new insights about the use of ESG and in fact focused on rehashing old proposals which aim to restrict investors rights in the proxy process and access to independent proxy research. The proxy-voting system is an integral component of the communication between a company and its shareowners. These bills fundamentally change this relationship."