House Bill To Limit Responsible Investing Would Harm Nation’s Capital Market System
September 19, 2024 /3BL/ - Yesterday the U.S. House of Representatives passed the first of two bill packages aimed at restricting the ability of investors to act on climate risk. This legislation would harm the nation’s capital market system by limiting the consideration of financially relevant information and putting retirement security at risk.
Ceres issued the following statement on the two bill packages:
“If passed and signed into law, these bills would impede shareholders’ engagement with the companies they own, limit visibility into corporate decision-making, place strict regulations and monitoring efforts on investors, jeopardize economic returns, and weaken the foundation of a strong free market. It is not the role of government to limit how financial professionals make decisions as they seek to maximize long-term shareholder value and returns.
“We have already seen severe economic consequences of restrictive investment policies in many states across the nation. When major banks in Texas could no longer finance the state’s public debt due to the restrictions placed on state investment policies, it resulted in more than $300 million in additional interest on municipal bonds in just the first eight months the law was in place. And in Oklahoma, municipalities are facing additional borrow costs due to the passage and implementation of anti-ESG legislation, raising borrowing costs for Oklahoma and creating hundreds of millions in additional expenses.
“The legislation up for debate this week in the U.S. House would do even more widespread damage. Policies that restrict investors and companies from considering all risk factors encroach on the free market, defy responsible business, and put Americans’ retirement savings at risk.”
The House is expected to vote today on the second bill package, which would restrict the authority of the U.S. Securities and Exchange Commission to compel critical disclosures and oversee the shareholder democracy process. If enacted, the bill would dramatically shift the balance of power away from investors and towards corporate management, restricting transparency and inhibiting shareholder engagement.
About Freedom to Invest
Freedom to Invest launched in 2023 to mobilize investment and business voices to defend against state and federal policies designed to undermine responsible business and financial investment practices. Hundreds of anti-ESG bills have been defeated in the last two years, including state legislation that would ban certain asset managers from working in states, make it a felony to use responsible investing principles, and upend municipal bond markets. For more information, visit www.freedomtoinvest.org.
About Ceres
Ceres is a nonprofit advocacy organization working to accelerate the transition to a cleaner, more just, and sustainable world. United under a shared vision, our powerful networks of investors and companies are proving sustainability is the bottom line—changing markets and sectors from the inside out. For more information, visit ceres.org.
