Despite McCarthy Ousting, Congressional Conservative’s Anti-ESG Agenda Is Safe

Forbes Money Despite McCarthy Ousting, Congressional Conservative’s Anti-ESG Agenda Is Safe Jon McGowan Contributor Opinions expressed by Forbes Contributors are their own. I am an attorney who writes about ESG policy, laws, and regulations. Following Oct 4, 2023, 04:47pm EDT | Press play to listen to this article! Got it! Share to Facebook Share to Twitter Share to Linkedin US Representative Kevin McCarthy (R-CA) speaks to US Representative Matt Gaetz (R-FL) in the House .

. . [+] Chamber at the US Capitol in Washington, DC, on January 6, 2023.

– (Photo by OLIVIER DOULIERY / AFP) (Photo by OLIVIER DOULIERY/AFP via Getty Images) AFP via Getty Images In an unprecedented move, Congressman Matt Gaetz toppled Kevin McCarthy from Speaker of the House of Representatives. While the turmoil is causing infighting within the Republican Party, one unifying theme in potential replacements is fighting against environmental, social, and governance. ESG is a rapidly expanding global industry that is set on changing the way business functions.

It adds a new level of scrutiny, beyond the primary goal of profits, by inserting a duty to the environment and sustainability efforts. The overriding push is tied to the Paris Accords’ Net Zero goals, but is driven through funds and local regulatory development. While the global focus has been on the environmental aspect, the social category has taken a controversial life of its own in the U.

S. with the inclusion of actions that some consider to be politically motivated. Subsequently, as ESG expanded globally, it encountered the strongest pushback in the U.

S. As major fund managers, like Blackrock CEO Larry Fink, embraced ESG ideals and stakeholder principles, business and conservative groups fought against the movement. The battle has mostly been fought at the state level, with Republican controlled states enacting legislation and policies that prohibit ESG as a factor in financial decision making of fund managers who manage pensions and funds from that state.

The rapid expansion also became problematic for regulators, as there was no framework in place to regulate ESG. The lack of framework concerned many environmental groups who believed it encouraged greenwashing, or the exaggeration environmentally friendly actions for marketing purposes. Within the past year, sustainability and ESG reporting standards have been adopted in various jurisdictions.

The European Union was the first, with the European Sustainability Reporting Standards that were approved in July and set to go into effect January 1. The ESRS will require publicly traded and large privately held companies to report greenhouse gas emissions, actions taken by the entity to reduce GHG emissions, and other green policies. MORE FOR YOU ‘Shocking’ Leak Blows Up Mystery Of Bitcoin Creator Satoshi Nakamoto Alert Test Will Hit Every U S Cell Phone Today People With Hidden Phones For Safety Have A Workaround Here s What Ahsoka s Big Baylan Skoll Statue Moment Was About Simultaneously, the U.

S. Securities and Exchange Commission has been developing their own sustainability reporting standards for publicly traded companies. The original rule proposed in March 2022 mimics the ESRS requirements and would, most likely, amend the Generally Accepted Accounting Principles to closely resemble the International Sustainability Standards Board’s recently released IFRS Sustainability Reporting Standards .

The SEC rule has already faced substantial political pushback relating to the scope of the reporting, and it is suspected the final rule will be less strenuous than the EU’s in an effort to avoid legal issues . The rule is expected to be released this month. One strong threat to the SEC rule has been a Congressional override.

In March, the U. S. Department of Labor issued a new rule under authority delegated to them in the Employee Retirement Income Security Act.

The ERISA rule allowed the use of ESG in the decision-making process of fund managers, but only as a tiebreaker when two investments had similar projected returns. The House of Representatives introduced legislation to override the DOL. That resolution was pushed heavily by then Speaker McCarthy who had made anti-ESG a policy priority.

While the resolution passed, it was vetoed by President Joe Biden , leaving the rule in place. It is not unreasonable to assume that former Speaker McCarthy would have undertaken similar steps in response to the new SEC rule. With the change in leadership will come a change in priorities.

The top contenders to replace McCarthy, House Majority Leader Steve Scalise and House Judiciary Chairman Jim Jordan, have also taken strong anti-ESG positions. Scalise has actively pushed for hearings on ESG, attending the DOL ERISA override resolution signing ceremony and stating after the veto that “House Republicans will keep fighting to overturn this rule allowing ESG investing and to make sure Americans are getting the best retirement they can, not the most woke. ” In anticipation to a series of committee hearings, he tweeted that “Woke CEOs who push the Left’s radical agenda at the expense of American families can expect to appear before Congress.

” Rep. Jordan has used the power of his committee chairmanship to further attack ESG. Since June, Jordan and the House Judiciary have been probing ESG funds as part of an ongoing investigation , issuing both letters and subpoenas, although the most notable hearings occurred in other committees in July as part of “anti-ESG month.

” The change in leadership will most likely result in a number of changes in legislative priorities. However, if either Scalise or Jordan assume the speaker role, it is safe to assume that anti-ESG stances will continue to be a priority. Follow me on Twitter or LinkedIn .

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