Washington – Today, the House Subcommittee on Financial Institutions and Monetary Policy held a hearing on ESG disclosures titled “Transparency in Global Governance.” Led by Representative Andy Barr (KY-06), the extreme politicians who organized the hearing attempted to use this opportunity to bash responsible investing and attack climate-related financial disclosure transparency. Rep. Barr has taken hundreds of thousands of dollars in campaign contributions from the oil and gas industry. He and his political allies have used their platform to peddle the interests of their wealthy donors.
The hearing is yet another instance in a series of attacks by politicians leveraging their positions of power to undermine responsible investing.
In response to the hearing, Unlocking America’s Future Spokesperson Kyle Herrig said:
“The self-serving politicians who organized today’s hearing attempted to spotlight misinformation and discredit the utility of ESG disclosures in a transparent effort to promote Big Oil’s agenda. Rep. Andy Barr and other extremist politicians are attempting to use scare tactics to portray the U.S. adoption of unified ESG risk disclosures in line with international standards as a conspiratorial attempt to allow foreign entities to govern American regulatory agencies and financial behaviors. However, as America’s international competitors continue to push ahead on responsible investing, our own politicians are starting unnecessary political wars and wasting taxpayer dollars to the benefit of their friends in the oil and gas industry.”
Highlights from the hearing include:
- Rep. Maxine Waters (CA-43) called out the senseless nature of political opposition to adopting international ESG disclosure standards, reminding her colleagues in Congress that “we should support these international discussions, not fear them, to ensure that international standards reflect American values and promote a stable global financial system.”
- Elizabeth Jacobs, senior specialist of sustainable finance at E3G, pointed to the importance of diversification within a global economy to build asset portfolio strength, indicating that “in order for U.S. investors to diversify responsibly, they need access to fair and competitive markets and exchanges.”
- Jacobs also noted the importance of ESG disclosures, naming “mitigating the risk of climate change and finding ways to crystallize the economic opportunities the transition to net-zero” presents as top priorities for the U.S. financial sector. As the international economy continues to shift towards a clean energy economy and the global energy transition becomes more and more lucrative, research continues to show that sustainable funds have comparable, if not better, financial returns to traditional funds with less downside risk. Nearly 80% of impact investors report that their financial performance meets or exceeds their targets.
- Even Rep. Andy Barr (KY-06), who has taken hundreds of thousands in campaign funding from Big Oil, admitted that “when transparency is lacking, the scale tips in favor of our global competitors.”
Lowlights from the hearing include:
- Rep. Andy Barr (KY-06) argued, “it’s not a conspiracy,” in response to accusations that political opposition to global ESG transparency standards are unfounded. “It’s a real concern about the American people being governed by entities that are totally unaccountable,” he continued.” On the contrary, America’s economic competitors around the world are continuing to adopt standardized climate risk-related financial disclosures. Without these guidelines, the U.S. will fall behind. In the last two years, Canada and the European Union have established climate disclosure standards and reporting requirements.
- He also referred to climate risk models as “speculative, sometimes scare-inducing models of plausible futures.” However, several research institutions have gone on record to note that the consequences of climate change are creating financial risk that investors need to consider, and that America’s current voluntary disclosure environment is expensive for both issuers and investors.
- Paul Kupiec, senior fellow at the Big Oil-funded American Enterprise Institute, attacked U.S. financial regulators, saying, “They use financial regulation to regulate non-financial economic activities.” As climate change continues to grow as a real financial risk, asset managers are continuing to demand reliable risk-related financial disclosures. Shortly after the SEC released its initial proposal, nearly 200 investment firms, nonprofits, and state treasurers sent a joint letter reaffirming support for the rule and outlining imperatives for the standard transparency requirements.
