ESG Disclosure Simplification Act of 2021
Floor Speech
I am opposed to this bill, and I rise in opposition to H.R. 1187.
Mr. Speaker, today, my Democrat colleagues, once again, are seeking to hijack our securities laws to push leftwing political and social agendas, despite dressing it up as investor protection.
Make no mistake, this bill will increase costs on publicly owned companies, discourage private companies from going public; and, frankly, could encourage not only private companies to stay private, but even have and entice public companies to go back to being private companies.
This is going to result in fewer investment opportunities for everyday American investors, also known as our constituents, who are saving for retirement, a college education or simply looking to just build a better life.
In short, this bill will increase the number of government-directed, mandatory disclosure requirements on publicly traded companies, which will increase compliance costs on companies and divert company resources that could have been used to create more jobs.
Now, to be fair, this is a job-creation bill. However, the only jobs created by this bill will be for a special tranche of attorneys, corporate compliance coordinators, and the occasional scientist; not exactly what an economist would call productive-types of jobs.
Under this bill, public companies would be required to disclose:
Environmental, social, and governance issues, as well as climate risk. These metrics would be set by the Securities and Exchange Commission, not Congress;
Descriptions of any expenditure for political activities and donations to political candidates or trade organizations by executives, these are duplicative of existing requirements, for example;
The ratio between the pay raise percentage of the company's executives and the pay raise percentage of the company's median employee. This is, in some ways, duplicative of the mandatory CEO pay ratio disclosure that Democrats put into the Dodd-Frank Act, which itself is an especially useless metric; country-by-country tax and financial reports from multinational enterprises. This will upend the current country-by-country tax reporting rules overseen by the IRS.
Mr. Speaker, let's be clear. My friends across the aisle are using the Federal securities laws to implement their partisan wish list of social policy priorities. They are doing it through mandatory disclosure regimes that are, at best, tangentially related to actual investment decisions.
To be clear, if information presents a material investment risk to a publicly traded company, the company is--wait for this--already required to disclose it. That information is out there for those companies that have material risk.
Materiality has been, and continues to be, the touchstone of our public company disclosure regime for more than eight decades and has actually even been affirmed by the U.S. Supreme Court. It has held the test of time, and we simply cannot just discard it to appeal to the Democrats' progressive agenda.
Our capital markets are the best in the world in no small part because materiality is the basis of our disclosure regime here in the United States, yet my Democrat friends, apparently, want to throw it all away for the sake of appealing to leftwing stakeholders.
Additionally, H.R. 1187 will greatly expand the SEC's jurisdiction by requiring the SEC to promulgate disclosures on environmental, climate change, political spending, tax reporting, and foreign policy issues, among others.
This is not the sweet spot for the SEC. It does not have the experience in any of these issues, and is not the appropriate entity for determining these metrics or industry standards, nor is the Securities and Exchange Commission the appropriate entity to review and enforce such disclosures.
The SEC knows how to regulate materiality. That is their expertise. They are not climatologists or climate scientists. They are not election law experts. And they most certainly do not know international tax law. That is the purview of the EPA, NOAA, the FEC, and the IRS.
Furthermore, smaller public companies will bear the burden of additional compliance costs. This bill fails to account for the impact it will have on smaller businesses and companies, especially those who are looking to go public. Or maybe I should say, were looking to go public. They certainly do not have the infrastructure or resources to spend on fixed costs of compliance like this.
H.R. 1187 will result in fewer investment opportunities for American investors. It will discourage private companies from going public and encourage public companies to go private to avoid these burdensome new nonmaterial and useless disclosure requirements.
Sadly, this will hurt the everyday investors, our constituents, that the Democrats claim they want to help. In other words, this bill stands to harm everyone saving for retirement, a college education, or just looking to build a better life.
This is just a bad bill, and I urge a ``no'' vote on H.R. 1187.
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Mr. HUIZENGA. Mr. Speaker, I include in the Record the following letters, a June 14 letter from the National Association of Manufacturers, a June 15 letter from the U.S. Chamber of Commerce, and a June 16 letter from the American Securities Association, all in opposition to this bill. National Association of Manufacturers, June 14, 2021 House of Representatives, Washington, DC.
Dear Representative: On behalf of the National Association of Manufacturers, I write to express opposition to H.R. 1187, the Corporate Governance Improvement and Investor Protection Act.
Manufacturers are taking the lead in innovating solutions to climate change, ensuring clean air and water, and enhancing diversity and inclusion--and, importantly, in providing information about this critical work to their investors. Public company reporting related to climate change and other environmental, social, and governance topics should allow for principles-based disclosure of financially material information relevant to these efforts. The NAM is concerned that the ESG Disclosure Simplification Act, the Shareholder Political Transparency Act, the Greater Accountability in Pay Act, and the Climate Risk Disclosure Act would impose disclosure mandates that focus on costly one-size-fits-all metrics rather than material, decision-useful information for investors.
Similarly, the Disclosure of Tax Havens and Offshoring Act would impose a significant compliance burden--while also risking exposure of valuable and proprietary data--by requiring public reporting of country-by-country tax information by U.S. companies. The United States' support for Action 13 of the OECD/G20's BEPS country-by-country reporting initiative was based on the requirement that these reports, which are exchanged between the IRS and other tax authorities, would remain confidential.
The NAM is engaging with the Securities and Exchange Commission as it considers ways to enhance the comparability of climate and ESG information disclosed by publicly traded companies. Manufacturers are hopeful that any new climate or ESG reporting framework will be flexible, principles-based, and materiality-driven while providing clarity to publicly traded companies and supporting their efforts to furnish material information to investors in a comparable manner. We encourage Congress to provide appropriate oversight of the SEC's ongoing work without mandating a one-size-fits-all approach. Sincerely, Chris Netram, Vice President, Tax and Domestic Economic Policy. ____ U.S. Chamber of Commerce, Washington, DC, June 15, 2021.
To the Members of the U.S. House of Representatives: The U.S. Chamber of Commerce strongly opposes H.R. 1187, the ``Corporate Governance Improvement and Investor Protection Act.'' While some of the underlying goals of H.R. 1187 are laudable, the bill would likely result in significant costs for Main Street investors and it would fail to achieve its stated objectives. The Chamber will consider including votes on this legislation in our ``How They Voted'' scorecard.
Over the last several years, the Chamber has worked closely with stakeholders to promote a corporate disclosure framework for environmental, social, and governance (ESG) factors. This framework acknowledges the inherently complex nature of these issues and allows companies to disclose industry specific information. We believe this approach would help ensure investors receive material, decision-useful information while eliminating the cost of burdensome and impractical mandates.
By contrast, H.R. 1187 would result in an unworkable, one- size-fits-all disclosure regime for public companies on ESG issues including climate change, executive compensation, and pay practices. This misguided approach would impose enormous compliance costs on public companies. It would be especially harmful to small issuers and emerging growth companies (EGCs) without the same compliance resources as large companies. H.R. 1187 would create yet another barrier to going public in the United States, thus removing opportunities for retail investors to build wealth and contribute to the economy.
Pursuant to the Supreme Court's landmark decision on materiality in 1976 (TSC Industries, Inc. v. Northway, Inc.), companies today are already required to disclose material information related to climate change and ESG. H.R. 1187 could veer away from this traditional standard for disclosure that has served as a centerpiece of America's well- functioning capital markets for decades. In that decision, the Court rejected the idea that a fact is material if it ``might'' be important to an investor, and explained that in formulating a materiality standard, it sought to avoid a scenario in which investors would be overwhelmed ``in an avalanche of trivial information--a result that is hardly conducive to informed decision making.'' This legislation is incompatible with Justice Marshall's opinion on materiality-- a standard that is recognized by SEC Chair Gary Gensler.
In addition, the Chamber has supported previous versions of legislation introduced by Representative Gregory Meeks on disclosure of corporate board diversity, which have garnered bipartisan support. The Chamber believes this legislation should be considered separately. It is regrettable that Representative Meek's thoughtful legislation has been included in this flawed H.R. 1187.
The Chamber opposes H.R. 1187, the ``Corporate Governance Improvement and Investor Protection Act,'' and urges you to vote against this legislation. Sincerely, Jack Howard. ____ American Securities Association, Washington, DC, June 16, 2021. Re H.R. 1187, the Corporate Governance Improvement and Investor Protection Act of 2021. Hon. Nancy Pelosi, Speaker, House of Representatives, Washington, DC. Hon. Kevin McCarthy, Minority Leader, House of Representatives, Washington, DC.
Dear Speaker Pelosi, Leader McCarthy, and members of the House of Representatives: The American Securities Association (ASA) provides this letter regarding H.R. 1187, the ``Corporate Governance Improvement and Investor Protection Act of 2021,'' which is scheduled to be considered by the House of Representatives this week. For multiple reasons set forth below, ASA must oppose H.R. 1187 and we urge members to vote against the bill. Political Spending
H.R. 1187 includes a section that would force corporations to disclose their political activities. Moving forward with a policy intended to stifle protected speech suggests this bill is less about providing investors with useful information, and more about silencing political opponents. Enacting policies to erect barriers for companies to engage in the political process on policy issues that are fundamental to their business violates the First Amendment.
The ASA strongly opposes this legislation.
Given that companies are already required to disclose their political contributions and lobbying activity, we fail to see what value duplicative regulation in this instance would add. We also question how the information required by this bill could possibly meet the test of ``materiality'' when comparing the actual dollar amounts associated with a public company's political activities to the total revenue of the company.
We note that a study found the market's perception of a company's value based on its stock prices is not related to a corporation's decision to either engage in or refrain from corporate political speech. Shareholders of public companies also seem to understand this as large majorities have consistently rejected activist shareholder proposals in this area. In short, the owners of the company do not believe management's political spending impacts a company's value or its financial performance. While these facts may be inconvenient, they should not be dismissed lightly.
As important, this section of the bill seems to run afoul of the First Amendment because some provisions could have a chilling effect on free speech. Certain politicians have already made it clear that this disclosure will be used to target companies who engage in the political process or choose to support certain organizations. This would allow the securities laws to be used as a public relations tool to silence political opposition. Congress should respect the First Amendment rights of all Americans and vote this bill down.
Improving Corporate Governance Through Diversity Amendment
The ASA appreciates that Congress will be considering, as an amendment to H.R. 1187, this bipartisan legislation to inform investors about the diversity of public company directors. ASA members have long recognized the benefits of workforce inclusion and have taken actionable steps to hire and train individuals of all backgrounds. The boards and workforce of ASA members reflect this view. We believe the best way to build a sustainable economy is though inclusion.
While ASA supports the Improving Corporate Governance Through Diversity Act, in April we recommended a number of changes to strengthen the bill prior to its markup by the Financial Services Committee. We continue to believe the diversity criteria should be expanded to include individuals of diverse viewpoints and diverse professional/educational backgrounds. The inclusion of individuals of different genders, races, ethnicities, viewpoints, and experiences is necessary to achieve the policy goals Congress rightly seeks to achieve.
Congress should refrain from adopting policies that would promote boards composed of a club of individuals whose experience tracks a certain managerial/educational path or requires adherence to a particular point of view. Today, more than ever, public companies need the benefit of hearing from individuals with different experiences who will question and engage with executives about the appropriate direction and decision-making of public companies. Unfortunately, changes to reflect this important priority have not been made to the underlying legislation. Rep. Hill Amendment--SEC Study
The ASA supports the approach taken by Representative Hill's amendment, which would require the SEC to study the inconsistencies and differences between ESG reporting frameworks prior to mandating new disclosures for public companies.
To date, the SEC has failed to conduct such a study. As a result, the Commission has no way to know how current ESG disclosure practices already inform investors, or what specific areas could be improved upon to ensure companies only disclose material information. This study would lead to a more targeted approach that would mitigate unnecessary compliance costs and protect investors from unworkable mandates. Mandatory ESG Disclosures
The ASA letter to the Financial Services Committee in April outlined a number of recommendations and concerns we had with a series of ESG-related bills that were marked up by the Committee. Unfortunately, none of those concerns or questions have been answered.
In that letter, we noted the following:
ESG disclosure mandates would create an unequal and unfair playing field for American businesses vis-a-vis Chinese companies;
Businesses would spend an enormous amount of time and resources reorienting their compliance systems to comply with ESG mandates at a time when policymakers should want companies to be focused on hiring to help the American economy recover;
Company management should be permitted to determine what is `material' to its business using its own business judgment-- just as management is now permitted to do for other risks that companies face;
Judgements about material disclosure can be challenged by investors or the SEC in court, which provides an important check that incentivizes companies to provide accurate and full disclosure. This process is not broken, and we see no reason to change it in this instance;
The costs of one-size-fits-all disclosure cannot be justified;
The beneficiaries of a prescriptive one-size-fits-all ESG disclosure regime would be an entrenched professional class on Wall Street of well-heeled corporate attorneys, auditors, mega-asset managers, proxy advisors, index providers, standard setters and investment banks. This begs the question: why is Congress using climate change as a reason to adopt policies that will transfer money from the public companies owned by America's mom-and-pop investors directly to the Wall Street-industrial-complex? Retirees, working families, and those investing for a better future should have an answer to that question before the bill moves forward;
The bill imposes a significant cost burden on small companies and undermines capital formation, which is one part of the SEC's three-part mission. Imposing these costs on small, emerging growth, and mid-sized companies will only serve to further entrench the large and mega-cap companies in our markets who can easily absorb them. We question why Congress would adopt a policy that tips the scales in favor of the same companies that many in this body believe are using their market power to harm consumers and distort our political economy; and
An unintended loophole will exempt Chinese companies in indexes from this disclosure. This will unfairly disadvantage American companies and deprive mom-and-pop investors of disclosure about Communist China's emission of greenhouse gases, or whether any CCP-controlled Chinese company is involved in commission of crimes against humanity and genocide that Congress. Conclusion
While ASA opposes this bill, we will continue to engage with members and the SEC to preserve our current disclosure system which ensures investors are provided with material information, including information that falls into the bucket of ESG. H.R. 1187 frustrates this goal, and therefore, we urge members to oppose it. Sincerely, Christopher A. Iacovella, Chief Executive Officer, American Securities Association.
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Mr. HUIZENGA. Mr. Speaker, I include in the Record an article from The Wall Street Journal dated from 2018, ``California Public Employees Vote Against Pension-Fund Activism.'' [From the Wall Street Journal, Oct. 18, 2018] California Public Employees Vote Against Pension-Fund Activism (By Paul S. Atkins)
Playing politics with other people's savings is never popular.
The California Public Employees' Retirement System this month said no thank you to pension-fund activism. Government workers unseated Priya Mathur, the sitting Calpers president. She was defeated by Jason Perez, a police-union official who criticized Ms. Mathur's focus on environmental, social and governance investing, or ESG. Mr. Perez emphasizes the agency's fiduciary duty to maximize investor returns.
Calpers represents almost two million California public employees, retirees and families. Yet it mostly makes headlines for its activism, such as divestiture from the tobacco industry. ``It's been used more as a political-action committee than a retirement fund,'' said Mr. Perez. ``I think the public agency [employees] are just sick of the shenanigans.''
Americans have always invested to achieve personal goals, such as saving for a house or their kids' college tuition. Some find that an ESG or issue-specific approach to investing accords with their personal philosophies. There is nothing wrong with people investing their own money however they like. But Calpers has a fiduciary duty to California public employees, who rely on it for retirement security.
Hester Peirce, a commissioner of the Securities and Exchange Commission, recently observed, ``When a pension-fund manager is making the decision to pursue her moral goals at the risk of financial return, the manager is putting other people's retirements at risk.'' The danger for Calpers is real: In 2016 a consultant found that the fund's beneficiaries missed up to $3 billion in investment gains from 2001-14. The reason? A divestiture from tobacco holdings for political purposes.
All this happens as Calpers remain underfunded. Worse, its beneficiaries are stuck. They are locked into the system and cannot vote with their feet.
While Calpers beneficiaries are demanding a renewed focus on returns, activists continue to work other channels to impose agenda-driven requirements on public companies. Sen. Elizabeth Warren last month unveiled a bill that would direct the SEC to mandate that all public companies disclose fossil- fuel use and greenhouse-gas emissions. This month a petition signed by 17 law professors and institutional investors, including Calpers, asked the SEC to develop mandatory rules for public companies to disclose ESG information.
The petition argues that since there are already so many requests to the SEC for issue-specific disclosures human- capital management, climate, tax, human rights, pay ratios by sex, and political spending--the agency should impose a broader ESG disclosure framework. The laundry list of possible disclosures underscores the problem. Requiring companies to account for an ever-changing list of hard-to- quantify social issues distracts from disclosure's real, statutory purpose: giving the reasonable investor material information he needs to make investing decisions.
These proposals always tout purported benefits to investors, but mandatory disclosure of additional immaterial information would be harmful. In a 2013 speech, former SEC Chairman Mary Jo White decried the ``information overload'' in already bloated annual reports that obscures pertinent disclosures for investors amid a sea of extraneous information. She summarized: ``What some investors might want may not be what reasonable investors need.'' Translation: More information is not necessarily better information.
Mandating politicized corporate disclosures doesn't align with the SEC's mission to protect investors and facilitate capital formation. Instead, it would divert resources away from business operations and growth. It is simply an attempt to shame public companies into compliance with activists' demands.
As Mr. Perez put it, criticizing a proposal to divest from some gun retailers earlier this year: ``This is nothing more than a political ploy.'' His push to prioritize performance over politics clearly resonated with California public employees; lawmakers and pension-fund managers should take note.
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Mr. HUIZENGA. Mr. Speaker, could I inquire as to the remaining time on each side?
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Mr. HUIZENGA. Mr. Speaker, just a point of information for the chair from California: We have one more speaker, and I will be prepared to close.
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Mr. HUIZENGA. I want to make sure we are clear not only with my colleagues but to those who may be listening and watching today.
Our side of the aisle has a couple of problems with this legislation today. First and foremost is the structure; next is the content; and then third, we have to question motivation.
What is the problem with the structure?
My friend from Connecticut talked about an issue that we have a lot of agreement on, and I say to him: Amen, hallelujah, let's talk about cybersecurity. Let's talk about how corporations are going to be held responsible for that.
However, my colleague from Iowa is talking about corporate tax law and country-by-country tax reporting. Now, that might be a good issue, but it is the wrong committee. I wondered to myself if Chairman Dingell, who chaired the Ways and Means Committee for a few decades, and my colleague from Michigan, would have allowed this committee mission creep. Actually, I don't wonder. I know exactly what he would have said: Hell, no. This is in my committee.
This issue is in the wrong committee, and Financial Services is not the right and proper place to be doing that.
Let's look at the content of these bills. We are not debating climate, and we are not debating these social issues that need to be addressed. We are debating who is responsible for enforcing these. We are not debating the failures and flaws of humans. We are questioning who should be the enforcer of these regulations and if they are equipped to do so.
Now, not that long ago, before defunding the police was a popular item to discuss, the SEC was commonly called on all sides the cop on the beat. They were the cops on the beat who were the enforcers. They were the ones who were coming along and saying: We are going to make sure that there is no fraud as we protect investors; we are going to make sure that we have efficient markets; and we are going to make sure that we are building capital.
Here is the problem: They are not prepared and equipped to do so.
Don't take my word for it. Let's look at President Obama's head of the Securities and Exchange Commission, Mary Jo White, who said: ``When disclosure gets to be too much or strays from its core purposes, it can lead to `information overload,' a phenomenon in which ever-increasing amounts of disclosure make it difficult for investors to focus on the information that is material and most relevant to their decisionmaking as investors in our financial markets. To safeguard the benefits of this `signature mandate,' the SEC needs to maintain the ability to exercise its own independent judgment and expertise when deciding whether and how best to impose new disclosure requirements.''
She also said at one point that the Securities and Exchange Commission was not prepared to do enforcement on areas that they had no expertise. She was referring to conflict minerals. That was also part of the Dodd-Frank Act.
So, we have a number of issues that are in this content. Earlier, my colleague, the chair from California, submitted a letter from CalPERS in support of this. Earlier, just prior to that, I had submitted an article from The Wall Street Journal where CalPERS had actually had a massive regime change--this was in 2018--regarding this pension fund activism.
At the time, Mr. Perez, who was elected as the president of CalPERS, said:
CalPERS has been used more as a political action committee than a retirement fund. I think the public agency employees are just sick of the shenanigans.
Hester Peirce, a Commissioner with the Securities and Exchange Commission, recently observed: ``When a pension fund manager is making the decision to pursue her moral goals at the risk of financial return, the manager is putting other people's retirements at risk.''
She was referring to the person whom Mr. Perez had beaten in that election.
The danger is real. In 2016, a consultant found that the CalPERS fund beneficiaries missed up to $3 billion in investment gains from 2001 to 2014. The reason? A divestiture of tobacco holdings for political purposes.
I wonder if this might be why some of the motivation for those on the other side, that they want to cover themselves. They want to make sure they are not open to the liability of retirees or others with a fiduciary being held responsible for bad decisionmaking when they use these amorphous, nondefined issues to make political statements rather than investment choices.
Madam Speaker, at the end of the day, what we have here is a problem not just of the issues but of the enforcement. I believe that if we are asking the ``cop on the beat,'' the Securities and Exchange Commission, to do a job that is up to the streets and maintenance department, then no one could expect that they are prepared for that. How can we expect that they are going to be able to do this?
With that, and including my opening statement where we looked at the disincentive to make sure there are more investment opportunities for everyday investors--our constituents--I must remain opposed to H.R. 1187.
Madam Speaker, I yield back the balance of my time.
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Mr. HUIZENGA. Madam Speaker, I rise in opposition to the amendments en bloc, and I yield myself such time as I may consume.
Madam Speaker, let's be honest. If the original bill wasn't bad enough, Democrats' en bloc amendments complete the picture. With this amendment, Democrats are packaging even more non-investment-relevant social priorities that only serve to feed protesters and dissidents with information to be used in naming and shaming companies.
I had mentioned earlier that in some of the bills in this package, we have some potential impossibility of working with each other. There are others that don't belong in our committee. Then there are other bills that don't make sense if we really, truly are trying to protect investors from fraud and trying to build capital in our country, which is the directive of the Securities and Exchange Commission.
Let's look at some of the specific information companies would be required to disclose under these amendments and how it benefits everyday investors.
Take the workforce and human capital management disclosure amendment, for example. How exactly is a company supposed to measure and disclose, in a comprehensible and comparable manner, ``employee engagement'' and ``alignment with business strategy''?
Additionally, how does disclosing the company's policies relating to ``freedom of association and work-life balance initiatives'' help everyday investors evaluate the risks of investing in that company?
My friends on the other side have been pretty adamantly opposed to Robinhood, but those who are looking to use Robinhood might actually like that work-life balance. That is kind of millennial type of language that is being used in here.
This amendment might as well require companies to disclose their policy on dogs in the office and whether their canine coworkers are purebreds or mixed breed types of rescue dogs. This doesn't have relevance and materiality to investors.
It is also worth highlighting an amendment that requires American companies to disclose whether the company or an affiliate of the company directly or indirectly engaged with an entity or the affiliate of an entity regarding the importation of not only goods from the Xinjiang Uighur Autonomous Region but also goods that have materials originally sourced from the XUAR.
Well, this is a redo from last Congress, and now that Democrats have one-party control, their motives are clear. The bill requires companies to show if their affiliates are indirectly engaged with affiliates of certain companies.
To put it simply, American companies would be required to disclose unknowable information and face securities fraud charges for any misstatements or omissions.
Now, let's not have any doubt: This side of the aisle has been highlighting the Uighur situation for a very long time through bills, through amendments, through sanctions, advocating those and holding China and the CCP responsible.
But, again, under this legislation, they will violate the law for trying to disclose unknowable information.
Why would a company want to go public under that regime? And how does disclosing such indecipherable information help everyday investors make more informed investment decisions?
Now, just to make sure my Democrat friends don't twist my words, like I said, I very much care about the Chinese Communist Party's human rights abuses. We need to be focused on that. I think many of the underlying concerns that motivate this legislation and amendment are important. But the public company disclosure regime is simply the wrong vehicle for addressing those concerns.
The SEC's mission is to: one, protect investors from fraud; two, maintain fair, orderly, and efficient markets; and, three, facilitate capital formation. These packages of bills do not do that, and nothing in the SEC's mission looks remotely like enforcing foreign policy goals or labor law.
Mary Jo White had pointed that out regarding the conflict minerals portion of the Dodd-Frank law. Once again, Democrats are more than comfortable with shoving the SEC into subject matter areas where they have zero expertise rather than getting the policy right.
There are real downsides to this approach my colleagues are taking. Mandatory disclosure increases compliance costs. The more complicated and technical the information required to be reported in disclosures, the more specialized the attorneys and compliance experts a company needs to adhere to a law.
If I need to spell that out for you, that is money that companies cannot spend on its workforce and investing in their business, in equipment, and in their wages, or returning money to everyday investors who have invested in those companies.
Moreover, just to be clear, because my Democrat friends keep talking about how badly investors want this information, under the disclosure requirements in these amendments, everyday investors aren't the ones who benefit. Social activists, as well as compliance professionals-- that is, lawyers and accountants--are the ones who will reap the biggest reward under these amendments.
We are helping the elite workforce with the bill and these amendments. Instead of helping investors participate in our capital markets and helping American workers, these amendments will leave everyday investors buried in disclosures that are, at most, tangentially related to investment.
Meanwhile, smaller public companies with shoestring compliance budgets will have to delay raising wages for workers in order to reallocate that capital to hiring more lawyers.
At its core, this amendment just heightens the key problem with the original bill. The additional disclosures will disincentivize private companies from going public, which will inhibit everyday investors, our constituents, from participating in our capital markets and will limit their choices of public companies to invest in.
Let's not eliminate access and opportunities to everyday investors, especially when rich investors will still have access to investing in companies that have gone private or stayed private in response to these amendments.
I think that is one of the things, Madam Speaker, that is getting lost in this. Those that have will continue to have those options. Those that are trying to build a future are going to get frozen out once again.
For that reason, I oppose this amendment, and I reserve the balance of my time.
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Mr. HUIZENGA. Madam Speaker, I am prepared to close, and I reserve the balance of my time.
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Mr. HUIZENGA. Madam Speaker, I yield myself such time as I may consume to close.
Madam Speaker, this was claimed earlier by one of the authors that investors wanted this information, I believe was the quote.
Well, I ask the question: If investors want this information, as claimed, then they can bring a vote to the shareholders to require these disclosures. Evidence, Madam Speaker, would dictate and show that precious few of these types of issues have actually been brought to shareholder meetings, where they are voted on. In the rare times that they have, even fewer have actually been approved.
So, no, investors don't look at this information. They don't want this information, and they don't view it as material to the investment decisions that they are making.
So you have to ask the question, then: Who is requiring or requesting this information? I suspect it is more about appeasing social activists. It is not about the workers and it is certainly not about the investors. This is about making sure that the virtue signaling that is required in today's corporate world--may I add, for large corporations, because there are plenty of small and medium-sized, even publicly traded companies that are bucking this.
But for these large corporations who have massive, massive compliance departments that are chock-full of attorneys, chock-full of CPAs and others that are going to work through this, and they are going to hire their friends in the consulting world to make sure that they are dotting the I's and crossing the T's, that is who it is really about.
Sadly, unfortunately, who ultimately ends up losing in that equation is the worker and the investor, our constituents.
Madam Speaker, with that, I yield back the balance of my time.
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Mr. HUIZENGA. Mr. Speaker, I claim the time in opposition to this amendment, although I am not opposed to it.
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Mr. HUIZENGA. Mr. Speaker, I appreciate the goals of this amendment, and I applaud my colleague from Washington. We should be concerned about the effects of this bill and ESG reporting on small businesses, and I would say that this is a step in the right direction.
However, I don't believe this amendment actually goes far enough. The ranking member of the full committee submitted an amendment to the Rules Committee that would have exempted small businesses from the onerous and unnecessary requirements of this bill, and, sadly, that amendment was not made in order. I think that may have achieved the same goal in a certainly much more clear manner for the author.
This bill will be particularly burdensome on small businesses that don't have the resources to pay all the expenses associated with complying with these disclosures, such as lawyers, accountants, and other ESG consultants.
I know the chairwoman had mentioned that somehow my statements earlier and the statements of my colleagues were supportive of large business and their support of this. It is actually the exact opposite. I could really care less what the Fortune 50 think about this.
I am concerned about that bottom 50. I am worried about those up-and- coming companies that are going to have those precious resources sucked into more compliance that, again, does not have relevance or materiality to investors, nor is it actually requested by investors.
But this bill is a prime example of Wall Street versus Main Street, and I commend my colleague for fighting for Main Street with this amendment.
I am prepared to accept this amendment because I hope it will help small businesses.
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Mr. HUIZENGA. Mr. Speaker, I continue to support this amendment, and I am happy to accept it.
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