The five draft bills included:
- The “ESG Disclosure Simplification Act of 2019,” which would require public companies to disclose ESG metrics;
- The “Shareholder Protection Act of 2019,” which would require companies to submit quarterly reports detailing expenditures on political activities;
- The “Climate Risk Disclosure Act of 2019,” which would require public companies to disclose information regarding the business risks associated with climate change;
- The “Corporate Human Rights Risk Assessment, Prevention, and Mitigation Act of 2019,” which would require companies to identify and report on human rights violations in their supply chains; and
- An unnamed bill to require issuers to file an annual or quarterly report under the Securities Exchange Act to disclose the total amount of corporate tax such issuer paid in the period covered by the report.
Democrats pushed for standardized, detailed reporting on ESG issues. “More must be done. Disclosures often aren’t as detailed as they need to be and they are difficult to compare across companies. The SEC should establish standards for ESG disclosure for all companies,” said Rep. Carolyn Maloney (D-NY).
“I think this is trying to set up disclosures to put political pressure on companies to do things that the Congress could never pass itself,” said Rep. Sean Duffy (R-WI).
Republicans argued that the cost of ESG reporting requirements will discourage more companies from raising capital within the public market. “Instead of placing additional burdens on public companies, we should be encouraging more growth and more IPOs here in the U.S., which will lead to more investment opportunities and choices for Main Street investors,” said Rep. Ann Wagner (R-MO).
Outlook: While the draft bills stand little chance in Congress, the concepts debated will likely gain further attention in the upcoming elections.
