GOP 'woke week' advances package of anti-ESG bills

House Republicans passed two pieces of anti-ESG legislation in just as many days, culminating in what the party has dubbed “woke week.”

The topic is essentially a continuation of the GOP’s long-running anti-ESG campaign, which last year featured a handful of hearings and numerous bills during “ESG month.”

This week’s bills, which seek to undo rules from the Securities and Exchange Commission, the Department of Labor and others, stand virtually no chance of passage in the Senate or of getting President Joe Biden’s signature. But like prior versions of legislation introduced in recent years, they indicate where Republicans are heading on climate disclosure and social issues, especially if former President Donald Trump is reelected in November.

On Wednesday, the House passed HR 5339, which would revert a retirement plan rule back to standards passed by the Trump administration, “requir[ing] fiduciaries of employer-sponsored retirement plans to make investment decisions based only on pecuniary factors.” However, it would also allow “nonpecuniary factors to be considered in certain situations, such as when selecting investment options for certain participant-directed retirement plans or if the fiduciary is unable to distinguish between investment alternatives on the basis of pecuniary factors alone,” according to the bill summary. That legislation also has other anti-ESG proposals folded into it, including one that could limit retirement plan fiduciaries from supporting certain issues in proxy votes.

On Thursday, there was a hearing on a separate bill, HR 4790, the “Guiding Uniform and Responsible Disclosure Requirements and Information Limits Act of 2023.” The bill, which was passed on a mostly party-line vote, counters a recent SEC rule that requires large public companies to report climate risks and emissions data to investors. It would also establish a committee that would advise the SEC on regulatory priorities, public reporting and corporate governance, proxy voting, and other issues.

The bill’s sponsor, Rep. Bill Huizenga, R-Mich., said that material information is already required to be disclosed to investors.

“The law requires any material information, including climate, including any of these other things that have been discussed today – it must be disclosed to investors,” he said.

Whether climate risk and other issues that fall under environmental, social, and governance criteria are actually material is something opponents of the SEC and DOL rules often disagree with.

“I feel like the dynamics continue to change. Even though they are moving the bills on the floor, they continue to reiterate that investors should have access to this information if it’s material,” said Rachel Curley, director of policy at US SIF: The Sustainable Investment Forum. “What they are suggesting is that the government is mandating ESG information and that [it] may not be material.”

Among the bills advanced so far, US SIF is most concerned about provisions in HR 4790, the legislation that passed Thursday, Curley said. That bill could impact ability of shareholders to bring resolutions that go to proxy votes, ultimately reducing their ability to engage with the public companies in which they invest, she said.

Such a proposal has also been raised by Rep. Ann Wagner, R-Mo., under a separate bill.

“My legislation will examine whether the proposal process has become unnecessarily politicized and help ensure these proposals don’t deter future investors or endanger current investors,” Wagner said Thursday.

Democrats were critical of HR 4790 and the wider efforts against “wokeness,” much as they were during the hearings Congressional Republicans held last year.

“We’re on the bring of yet another government shutdown brought to you by MAGA Republicans. Instead of working to prevent a shutdown, we’re debating a bill that seeks to divide America with fake culture ware that are really about denying the real dangers posed by climate change and denying the fact that our country’s rich diversity is one of our greatest resources,” said Rep. Maxine Waters, D-Calif. “Our markets only work when investors have sufficient information to make informed investment decisions.”

An advocacy group for ESG standards and sustainable investing, Unlocking America’s Future, characterized the Republican campaign as an effort backed by fossil fuel interests.

“Trump and his Project 2025 backers have developed a secretive blueprint backed by greedy oil and gas billionaires to ban the American people and business owners from being able to invest responsibly,” group spokesman Kyle Herrig said in statement provided by email. “Their plans will hurt Americans' retirement savings and cost them more in taxes. We will ensure that these plans don't become a reality.”