Amid what some are calling “ESG July” in the House Financial Services Committee, the U.S. Impact Investing Alliance calls on businesses and investors to take a stand in support of investor freedom and American economic competitiveness.
Over the course of the month, the Republican majority in the House of Representatives will hold at least seven hearings attacking everyone from institutional investors to proxy advisors to insurance executives for leveraging ESG tools and strategies. At the end of the month, it is likely that the Financial Services Committee will advance a slate of legislation that undercuts basic investor freedoms and risks harming the economic security of U.S. retail investors and retirement savers.
These hearings and legislative proposals are attacks designed to limit investor freedom and reduce corporate transparency and accountability.
If anti-ESG activists get their way, investors will be stripped of foundational tools used to assess ESG-related risks and opportunities. We are deeply concerned by the rhetoric on display at these hearings, ignoring the financial relevance of ESG factors and the priorities of U.S. investors seeking that information.
ESG is one tool among many that investors use to make well-informed decisions in their pursuit of competitive financial returns. Politicians should not be in the business of restricting investor access to information, especially when failing to consider financially relevant factors (e.g., quality jobs or climate risks) would constitute a breach of fiduciary duty. At the end of the day, this would directly harm the retirement savers and retail investors who rely on asset allocators and asset managers acting as responsible stewards of capital.
These actions threaten American economic competitiveness.
America’s economic competitiveness on the global stage is in large part thanks to our capital markets, which protect investors’ freedom to choose strategies that best suit their objectives. Their capital is put to work to build infrastructure, create jobs and strengthen our economy. Political interference with investor freedoms threatens the competitive positioning of the U.S. capital markets, to the detriment of U.S. workers, communities and businesses.
Global regulators, standard setters and market actors are already moving forward with disclosure and accountability requirements for companies and asset managers, placing those who invest in U.S companies at an information disadvantage if we fall behind. Policymakers should seize this opportunity to lead through policies that enhance investors’ access to information and shareholder engagement rights.
The overwhelming majority of Americans want to maintain the freedom to invest.
It is critically important that Members of Congress hear from businesses, investors and other constituents who share the belief that investors should have the tools and information needed to evaluate ESG risks and opportunities.
The U.S. Impact Investing Alliance recently joined our peers at US SIF: The Sustainable Investment Forum, Ceres and the Interfaith Center on Corporate Responsibility (ICCR) in submitting a joint letter to the Committee in support of sustainable investment tools. Read the full letter here.