Republicans on the House Financial Services Committee in the U.S. Congress announced on Tuesday the introduction of a series of bills aimed at pushing back on the influence of ESG initiatives in capital and financial markets including proposals to derail efforts to implement ESG and climate-related disclosure requirements on companies, and to reduce the ability of investors to engage with companies on sustainability issues.

Proposals in the new bills include only requiring companies to report only on issues that they have determined as material, allowing companies to exclude ESG-related shareholder proposals from proxy materials, and reducing the ability of regulators to collaborate on climate-related financial risk.

The move marks the latest in a string of anti-ESG initiatives by Republican politicians in the U.S., with the committee describing the new bills as aimed at addressing “the threats environmental, social, and governance (ESG) initiatives pose to the American financial system.” House Republicans launched an “ESG Working Group” in February 2023, to coordinate the party’s approach on ESG proposals, with focus areas including the SEC’s upcoming climate-related disclosure rules, and the use of the proxy voting process by investors “to impose ideological preferences in ways that circumvent democratic lawmaking.”

In a statement announcing the new proposals, the committee said:

“These measures represent the first step in Republican efforts to combat the ESG movement by restricting politically motivated, non-material disclosure mandates, reforming the proxy voting and shareholder proposal processes, increasing transparency for federal banking regulators, and limiting the Securities and Exchange Commission’s (SEC) authority to regulate shareholder proposals.”

The new bills include the Guiding Uniform and Responsible Disclosure Requirements and Information Limits (GUARDRAIL) Act, which targets the SEC’s upcoming climate-related disclosure rules. The proposal would only allow the SEC to require disclosure that the issuer has determined as material to a voting or investment decision. The bill also requires the SEC to evaluate the “detrimental impact” and the legal basis for recent European rules that effectively require large U.S. companies to provide sustainability-related disclosures, including the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence (CSDD) legislation.

Congressman Bill Huizenga, sponsor of the GUARDRAIL Act, said:

“Since taking over at the SEC, Chair Gensler has seemingly done everything in this power to dismantle our capital markets. Americans saving for retirement need less immaterial disclosure regulations that ultimately drive-up costs and reduce returns for everyday investors. The GUARDRAIL Act takes positive and deliberate steps to refocus the SEC on its core mission instead of pushing a political and social agenda.”

The Protecting Americans’ Retirement Savings from Politics Act includes proposals that would make it more difficult for investors to address ESG issues through the shareholder proposal and proxy voting process, including a rule allowing issuers to exclude shareholder proposals from its materials for shareholder meetings “if the subject matter is environmental, social, or political.” The bill also introduces rules for proxy advisory firms, which have been targeted by Republican politicians over their support for climate and DEI-related issues, and requires asset managers to have written consent from investors to consider “non-pecuniary” factors in their decision making.

Other bills introduced by the committee include the American Financial Institution Regulator Sovereignty and Transparency (American FIRST) Act, which includes rules not allowing U.S. regulators to meet with organizations including the Financial Stability Board and the Basel Committee on Banking Supervision on the topic of climate-related risk unless a series of requirements are met, and the Businesses Over Activists Act, targeting the SEC’s control over shareholder proposals.

Businesses Over Activists Act sponsor Congressman Ralph Norman said:

“ESG is an evil pollutant that must be eradicated from corporations and businesses. 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 politized proposals. The SEC should not and does not have the authority to compel companies to include ESG proposals.”