Congress needs to stop enabling corporate greed. But that’s exactly what House Republican leadership is trying to do this week by bringing up anti-ESG bills passed by two committees in the U.S. House.
If you have no idea what “anti-ESG” is, all you need to know is that it is a wildly unpopular, Koch Brothers-backed campaign to slow the clean energy transition and reverse corporate progress on racial justice, workplace diversity and labor protections. ESG stands for “environmental, social and governance” — three things that really matter to shareholders.
Republicans on the House Financial Services Committee seem to hate shareholder proposals, which are resolutions that shareholders of listed companies can submit for a vote asking the board and executives to do something. For example, this year, shareholders voted on measures to audit Amazon’s dangerous warehouse working conditions, audit Walmart’s adverse impacts on non-white communities, address alleged union-busting at Tesla, and evaluate the largest banks’ fossil fuel financing compared to their clean energy financing.
Republicans are attempting to demonize and curtail these modest shareholder-driven requests on the critical issues of worker safety, racial equity, labor rights and climate. Curbing shareholder democracy has been a longtime priority of the Chamber of Commerce; it doesn’t want shareholders to be concerned about the long-term sustainability of their investments, especially if it interferes with short-term, risky corporate practices.
The Republicans are also targeting large asset managers that control huge blocks of the shareholder votes and the advisory firms that make voting recommendations, accusing them of being insufficiently loyal to corporate boards and executives. But the reality is that large asset managers already overwhelmingly side with the often short-sighted interests of corporate leadership instead of supporting the long-term interests of the people whose money they manage — including our retirement savings.
Relatedly, Republicans are looking to clip the wings of the agency tasked with investor protection: the Securities and Exchange Commission. Already, an important rule aimed at providing investors with critical information about climate-related financial risks is mired in litigation, and a rule that would provide investors with information about corporations’ workforces has stalled. Now they want to roll back the authority to require corporate disclosures to investors and create a structure inside the agency to entrench the perspective of corporate boards and executives.
If this agenda were not bad enough, Republicans on the House Education and the Workforce committee are setting their sights squarely on workers’ hard-earned retirement savings. By reviving Trump-era Department of Labor rules that seek to coerce those who manage trillions of dollars of workers’ money to focus exclusively on risky short-term returns, Republicans are actively trying to weaponize workers’ money against them while undermining their retirement security. They are also seeking to block retirement plans from incorporating important diversity goals when hiring service providers.
Republicans pushing for these bills to become law want to insulate boards and executives of big corporations from the input and accountability of long-term shareholders so they can be free to pursue risky practices without the slightest impediment, and have no qualms with undermining workers’ retirement security to achieve this goal.
A coalition of investor, labor, climate and public interest groups that has expressed opposition to these bills will be keeping an eye on whether their members of Congress side with short-term corporate greed or long-term sustainability when these bills come to the floor this week.
Natalia Renta is senior policy counsel for corporate governance and power at Americans for Financial Reform.
