Cybersecurity Disclosure Act of 2021

Mr. Speaker, pursuant to House Resolution 473, I call up the bill (H.R. 1187) to provide for disclosure of additional material information about public companies and establish a Sustainable Finance Advisory Committee, and for other purposes, and ask for its immediate consideration in the House.

Mr. Speaker, I ask unanimous consent that all Member may have 5 legislative days within which to revise and extend their remarks on H.R. 1187 and to insert extraneous material thereon.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 1187, the Corporate Governance Improvement and Investor Protection Act.

H.R. 1187 is a package of bills designed to strengthen investor protections and require companies to provide environmental, social, and governance disclosures, known as ESG. I thank my colleague, Representative Juan Vargas, for his leadership on this package.

This bill provides investors with critical information on ESG matters by requiring public companies to disclose key information to shareholders regarding corporate political spending, worker pay, CEO compensation, climate risk, and country-by-country tax reporting; and provides issuers with clear, consistent standards to disclose this information.

This is key information that investors have been demanding in order to make the best decisions on the short- and long-term viability of the companies they are investing in.

It is surprising that, to this day, there are no explicit ESG requirements and investors are left to piece together the story of a company's material risk with insufficient information. This is unacceptable.

So I am pleased that this package of bills will improve investor protections by holding public companies accountable and providing greater transparency.

This package includes a number of bills authored by several hardworking members of the Financial Services Committee, specifically: Representative Juan Vargas, Representative Bill Foster, Representative Nydia Velazquez, Representative Sean Casten, and Representative Cindy Axne.

Specifically, Mr. Vargas' bill, the ESG Disclosure Simplification Act, requires public companies to disclose certain ESG information to shareholders, as well as the impact of the ESG policies on their strategies.

Mr. Foster's bill, the Shareholder Political Transparency Act, requires public companies to submit quarterly reports to the SEC on any and all political expenditures, including dark money.

Ms. Velazquez's bill, the Greater Accountability in Pay Act, sheds light on pay disparities, helping to close the gender and racial pay gap.

Ms. Axne's bill, the Disclosure of Tax Havens and Offshoring Act, requires disclosures that discourage companies'

use of tax havens and encourages repatriation of taxes to the United States.

Mr. Casten's bill, the Climate Risk Disclosure Act, requires disclosures that encourages companies to plan for the impact of climate change on their company.

Each of these bills passed the Financial Services Committee with unanimous Democratic support. I thank all these Members for their work on these bills, their contributions to the legislative package, and their leadership on these important reforms to protect investors and hold corporations accountable.

This package is the right thing to do for investors and our markets. It is past time that Congress make ESG requirements explicit. For these reasons, I urge my colleagues to support the bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr. Vargas), our leader and the real sponsor on this legislation.

Mr. Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. Casten).

Mr. Speaker, I yield an additional 30 seconds to the gentleman from Illinois.

Mr. Speaker, I yield 2 minutes to the gentlewoman from Iowa (Mrs. Axne).

Mr. Speaker, I yield 1 minute to the gentleman from Connecticut (Mr. Himes).

Mr. Speaker, I yield 1 minute to the gentlewoman from Illinois (Ms. Underwood).

Mr. Speaker, I include in the Record letters from California Public Employees' Retirement System, Public Citizen, the North American Securities Administrators Association, and Principles for Responsible Investment.

California Public Employees' Retirement System, Executive

Office,

June 14, 2021.

Subject: H.R. 1187, The Corporate Governance Improvement and

Investor Protection Act.

Hon. Nancy Pelosi

Speaker, House of Representatives,

Washington, DC.

Hon. Kevin McCarthy,

Minority Leader, House of Representatives,

Washington, DC

Dear Speaker Pelosi and Minority Leader McCarthy: On behalf

of the California Public Employees' Retirement System, I

write to express support for the overall direction of H.R.

1187, the ``Corporate Governance Improvement and Investor

Protection Act,'' which would require public companies to

disclose material information on the link between

environmental, social, and governance (ESG) metrics and their

long-term business strategy, as well as political

expenditures, compensation practices, climate-related risk

and tax expenditures, among other issues. This bill will

improve and enhance corporate disclosures essential to

maintaining the competitiveness of U.S. financial markets.

As the largest public defined benefit pension fund in the

United States, we manage approximately $465 billion in global

assets on behalf of more than two million members. Our

fiduciary duty requires that we take a long-term view in

assessing whether the companies that we hold in our portfolio

are effectively managed and able to provide the sustainable,

risk-adjusted returns that allow us to meet our commitments

to pay benefits earned by these dedicated active and retired

public servants for decades to come.

We fundamentally depend on the integrity and efficiency of

financial markets to meet these commitments and rely upon

financial reporting to provide transparent and relevant

information about the economic performance, conditions, and

operations of the

companies in which we invest. We believe corporate disclosure

of material financial information is a precondition to

maintaining effective and consistent corporate accountability

and sustainable economic growth. As the Securities and

Exchange Commission (``SEC'') has said in the past:

``Only through the steady flow of timely, comprehensive,

and accurate information can people make sound investment

decisions. The result of this information flow is a far more

active, efficient, and transparent capital market that

facilitates the capital formation so important to our

nation's economy.''

Critically, CalPERS and other pension funds are inhibited

from adequately exercising their fiduciary duty without such

disclosures. Disclosure of material financial information is

necessary to close the information gap that occurs when

management of a company is aware or should be aware of

certain risks, yet such information is not available to

shareowners. We believe H.R. 1187 will address critical areas

in which more high-quality, consistent, and comparable

disclosures by public issuers are necessary, and build a more

robust reporting regime that enhances shareowner value over

the long-term. We are pleased that the following measures,

which CalPERS has been on the record in supporting, are

included in the Corporate Governance Improvement and Investor

Protection Act:

H.R. 1187, the ESG Disclosure Simplification Act, which

would, among other things, require issuers to disclose

certain ESG metrics to shareholders, the connection between

those metrics and the issuer's long-term business strategy,

and the method by which the issuer determines how ESG metrics

impact its long-term strategy. We believe the current quality

and quantity of relevant ESG reporting does not meet

investors' needs and support the SEC playing a prominent role

in standardizing and assuring the accuracy of ESG data

reporting, and that it is reflected in company financials.

H.R. 1087, the Shareholder Political Transparency Act,

which would require public companies to disclose detailed

information about their political spending to the SEC and

shareholders in specified quarterly and annual reports. The

CalPERS Governance & Sustainability Principles call for

responsible board oversight, including disclosures of

corporate charitable and political activity to ensure

alignment with business strategy and to protect assets on

behalf of shareowners. As fiduciaries, we need to know how

our capital is being used, including if and when political

expenditures are made. SEC rulemaking would bring clarity and

consistency in the format and scope of disclosures and

provide a cost-effective alternative to private ordering.

Furthermore, political expenditure disclosure is consistent

with the SEC's requirement for public companies to disclose

meaningful financial information and would encourage prudent

use of corporate shareowner resources for political

activities.

H.R. 2570, the Climate Risk Disclosure Act, which would

require public companies to report financial risks posed to

them by climate change, the processes they use to identify

those risks, and the actions they take to mitigate those

risks. Our investment strategy is to make sure our portfolio

is resilient to short-term and long-term risks, both of which

include some dimension of climate change. We seek to find the

investment opportunities that the energy transition brings,

and to bring down emissions that contribute to global

warming. We believe it is vital that companies identify,

manage, and disclose material environmental risks and

opportunities relevant to their short-term and long-term

success. We support the establishment of a uniform reporting

regime for climate change risk disclosures that would address

key issues that impact shareowner value, including minimizing

risk, maximizing returns, and ensuring accountability from

all those involved.

H.R. 3007, the Disclosure of Tax Havens and Offshoring Act,

which would require public companies to annually disclose

information on their subsidiaries and specified country-by-

country financial information including total pre-tax

profits, total amounts paid in State, Federal, and foreign

taxes, employees, and tangible assets. As an investor in many

of the largest public companies in the world, we are acutely

aware of the complexities of international taxes, and the

increasingly important role that taxes play in corporate

profitability. However, current tax disclosures in the United

States do not provide investors with sufficient tax-related

information to adequately assess companies' valuations and

risks. We believe increasing transparency and requiring the

disclosure of overly aggressive international tax planning

arrangements helps to reduce systemic risk that threatens

global markets and ensure stronger long-term outcomes.

In addition, we are supportive of including additional

provisions in the Corporate Governance Improvement and

Investor Protection Act, such as the following disclosures

related to human capital management, board diversity, and

cybersecurity:

H.R. 3471, the Workforce Investment Disclosure Act, which

would require public companies to disclose information about

their Human Capital Management (HCM) policies, practices, and

performance in their annual reports. CalPERS expects fair,

accurate, and timely reporting on how companies identify and

manage risks related to the three forms of capital:

financial, physical, and human. The fact that there are few

standards for measuring and reporting on human capital topics

makes it difficult for investors to truly understand related

risks and opportunities when assessing individual companies.

We believe that rules-based disclosures with numeric metrics

provide crucial information to long-term investors, like

CalPERS, who are concerned about sustainability over time. We

have made recommendations in our comment letter on the SEC's

proposed rulemaking under Regulation S-K for metrics that

should be disclosed by all registrants, including the number

of full-time, part-time, and contingent workers; employee

turnover rates; health and safety, employee engagement and

diversity statistics.

H.R. 1277, the Improving Corporate Governance Through

Diversity Act, which would require public companies to

annually disclose the voluntary, self-identified racial,

ethnic, gender, and veteran status of their board of

directors, nominees, and senior executives, and establishes

an advisory group to recommend strategies to increase

diversity in these leadership positions. We support

initiatives that promote talent diversity--including a broad

range of education, experience, thoughts, perspectives, and

competencies--to help enable effective board leadership. We

view board diversity in terms of skill sets, sex, age,

nationality, race, sexual orientation, gender identity,

disability, and historically underrepresented groups, and

believe requiring public companies to annually disclose the

self-identified racial, ethnic, gender, and veteran status of

their board of directors, nominees, and senior executives is

an important step toward challenging ``group think'' in

corporate boardrooms and C-suites, which can severely limit

companies' ability to innovate and effectively engage with

shareowners and other stakeholders.

Mr. Speaker, I have no further speakers, and I am prepared to close. I reserve the balance of my time until the gentleman from Michigan yields back.

Madam Speaker, may I inquire as to how much time is remaining.

Madam Speaker, I yield myself the balance of my time.

Madam Speaker, this bill provides urgently needed investor protections by requiring the Securities and Exchange Commission to adopt clear, consistent standards for ESG metrics. Without the information requirements in this bill, investors are left with inconsistent information across companies and are ultimately unable to fully assess their investment decisions.

Investors deserve to know the risks they are exposed to with relation to climate change, political expenditures, and other important factors. We must make this right and take action to bring accountability to public companies.

Some or all of the provisions of this package have been supported by Public Citizen, AFL-CIO, SEIU, California Public Employees' Retirement System, Americans for Financial Reform, Council of Institutional Investors, United Nations Principles for Responsible Investment, Americans for Tax Fairness, North American Securities Administrators Association, FACT Coalition, Oxfam America, Ceres, and Sierra Club, among others.

For years, investors and market participants have been demanding more and better disclosures regarding ESG matters, which research shows can have significant impacts on the short- and long-term values of companies.

For example, a report issued by the BlackRock Investment Institute found that companies that score high on ESG measures are better able to adapt to environmental and societal changes, use resources more efficiently, have more productive employees, and tend to face lower risk of reputational damage and regulatory action.

Matters related to climate risk, the ways companies invest in their workers and further diversity, spend their cash on political expenditures, their global human rights records, their tax avoidance strategies, and how they invest in crucial corporate infrastructure such as cybersecurity are all significant and material factors in companies' short- and long-term viability.

Investors, who are the true owners of our Nation's public companies, recognize the importance of this information to their decisionmaking and have been demanding this information for years.

For example, in 2018, a coalition of public pension funds asset managers and others representing over $5 trillion in assets petitioned the SEC for rulemaking on mandatory ESG disclosures. Over 2,300 investment managers, asset managers, and service providers representing over $80 trillion in assets under management have become signatories to the United Nations Principles for Responsible Investment, which commits to incorporating ESG factors into their investment decisions.

A group of 35 institutional investors representing over $6.6 trillion in assets form the Human Capital Management Coalition has petitioned the SEC to adopt rules to require issuers to disclose information related to their human capital management policies, practices, and performance.

When the SEC solicited comments on political spending disclosures in 2011, it received over one million comments; by far more comments than any other SEC rulemaking petition, and the vast majority of which were overwhelmingly favorable. Yet the SEC's efforts were stymied because the Senate minority leader has personally insisted on statutorily prohibiting the SEC from even studying the issue.

However, we are currently without clear, consistent standards for this information to be disclosed. Investors will continue to be left in the dark. It is time we give investors and markets the information they have been demanding for so long.

And let me be absolutely clear about who we are fighting for. The other side has taken up the issue, as it tends to want to protect these big public corporations from disclosures.

It is for the American workers, the retirees, who worked their whole lives to save for retirement, for the public pension funds investing on behalf of our Nation's teachers and our firefighters, and other frontliners. We are fighting to ensure they have been given the tools they need to protect what they have worked so hard for, to achieve the American Dream.

So I would urge all of my colleagues who are concerned about not only the retail investors, but concerned about the institutional investors who are responsible for these teachers and these firefighters and these others that I have alluded to, and their ability to feel safe and comfortable that decisions are being made that are in the best interest of the people who are invested in them.

So I would ask for an ``aye'' vote on this very, very comprehensive and serious legislation.

Madam Speaker, I yield back the balance of my time.

Madam Speaker, I claim time in opposition to the amendment.

Madam Speaker, I strongly oppose Mr. Burgess' amendment. This amendment is interesting to me because Republicans have, without fail, consistently cited the materiality standard both here on the House floor and in the Financial Services Committee as a basis to oppose very important disclosures.

Republicans have argued over and over again that we do not need to enact any new disclosures because companies are already required to disclose any and all material information. But, with this amendment, it seems their purported commitment to materiality has gone out the window so that they can bring attention to their massive tax cuts for the rich.

In 2018, when the United States Government should have been focused on growing the real economy for American workers, the former President pushed forward the largest tax giveaway to our country's largest corporations and executives in history. This government handout provided corporations and executives with $2 trillion in tax cuts and giveaways, saddling the United States Government with debt.

Make no mistake, these tax cuts did not go primarily to workers, but, instead, they went overwhelmingly to the top 1 percent. The year after the Trump tax cuts were implemented, public companies spent nearly $1 trillion in stock buybacks, rather than investing in research and development, increasing worker wages, or shoring up their bottom lines to make sure they could weather times of crisis.

According to the Center on Budget and Policy Priorities, Trump's tax plan gave the top 400 highest income taxpayers an additional $15 million per year. Compare this to the $2.8 million the average college graduate will earn in their lifetime.

This amendment absolutely and completely ignores the harm done to hardworking Americans and focuses on alleged harm to the large corporations. This amendment suggests our Nation's largest companies should not be paying their fair share, while American workers are forced to pay for Republicans' corporate handouts.

Madam Speaker, I urge my colleagues to reject this amendment, and I reserve the balance of my time.

Madam Speaker, I yield myself the balance of my time.

Mr. Burgess' amendment is a gimmick intended to distract from the important goals of this package. It insinuates that corporations should not be paying their fair share, while hardworking taxpayers foot the bill. So I urge my colleagues to join me in rejecting Mr. Burgess' amendment.

Madam Speaker, I yield back the balance of my time.

Madam Speaker, pursuant to section 4 of House Resolution 473, I offer amendments en bloc.

Madam Speaker, I rise in support of the amendments en bloc, and I yield myself such time as I may consume.

Madam Speaker, I rise in strong support of this en bloc package of Democratic amendments to H.R. 1187, the Corporate Governance Improvement and Investor Protection Act.

These amendments include critical provisions offered by my colleagues, Representative Himes, Representative Axne, Representative Phillips, Representative Wexton, Representative Frankel, and Representative Meeks.

These provisions strengthen H.R. 1187 by requiring public companies to disclose key information related to cybersecurity, corporate board diversity, human rights abuses, human capital management, and the ways companies are investing in and protecting their workforce.

Investors, the true owners of public companies, need this information because of the significant effects they can have on the bottom lines and operations of the companies they are investing their hard-earned money in. Investors need this information to hold companies accountable.

Madam Speaker, I urge my colleagues to support these important measures, and I reserve the balance of my time.

Madam Speaker, I yield 1 minute to the gentlewoman from Iowa (Mrs. Axne).

Madam Speaker, I yield 1 minute to the gentleman from New York (Mr. Meeks).

Madam Speaker, I yield an additional 30 seconds to the gentleman from New York.

Madam Speaker, I yield 1 minute to the gentlewoman from Florida (Ms. Lois Frankel).

Madam Speaker, I yield myself the balance of my time to close.

I urge my colleagues to join me in standing up for our Nation's investors and workers to vote ``yes'' for these Democratic amendments.

I do believe that Mr. Huizenga correctly described who they are working for. He just talked about how big these corporations are and how much they have to manage.

Of course, prior to him, Mr. Burgess talked about, yes, the tax breaks that they receive, and they should receive more tax breaks. However, they are worried about these corporations and their ability to comply, despite the fact they have all of the accountants they need, they have all of the personnel they need, they have all of the management they need. They have everything that they need to be in compliance.

We are simply saying it is time for them to disclose information that the investors have been asking and begging for.

And, of course, they often refer to the retail investors. But the institutional investors must be included in this decision because they are the ones that are in control of the teachers and the firefighters and the workers on the front lines and all of that money that they are investing for them, and they have got to protect them. The way that you protect them is making sure that the investors understand how to make good decisions based on information.

If the big corporations, with all that they have to be able to operate, do not give them this information, do not have this information, do not share this information, they are at a great disadvantage.

And so I would simply ask my colleagues to understand whose side we are on. We are on the side of the retail investors and the institutional investors who are handling all of the money of our frontline workers who are investing for their retirement.

I would ask for a ``yea'' vote on these en bloc amendments.

Madam Speaker, I yield back the balance of my time.

Madam Speaker, on that I demand the yeas and nays.

Mr. Speaker, I claim time in opposition.

Mr. Speaker, I strongly oppose the amendment offered by Mr. Hill. This amendment would gut the entirety of H.R. 1187. Bizarrely, this amendment offered by my colleague has an odd focus on climate change, suggesting that we need more study about the financial risk of climate change. Let me be very clear: climate change is real. We cannot alter the Earth's orbit or the Moon's orbit or click our heels three times and wish for climate change to magically disappear.

In fact, the impacts of climate change are already apparent and are affecting global financial markets. Unfortunately, studies show that market prices currently fail to factor in the risks of climate change to the tune of trillions of dollars.

Mr. Hill's amendment would also allow companies to continue to engage in legally risky tax-avoidance schemes to funnel limitless amounts of corporate dark money into politics and to enrich CEOs while worker wages remain stagnant. This is precisely the information that investors want to know about the companies that they own.

I urge my colleagues to reject this amendment. I reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time to close.

Mr. Hill's amendment would completely gut H.R. 1187 and would prevent investors from accessing critical environmental, social, and governance information that they need to make the best investment decisions possible and hold the companies they own accountable.

I urge my colleagues to vote ``no'' on Mr. Hill's amendment, and I yield back the balance of my time.

Mr. Speaker, this amendment offered by Representative Schrier requires the SEC to work with the Office of the Advocate for Small Business Capital Formation and the Office of the Investor Advocate to study the issues smaller public companies may face in reporting ESG disclosures, and to make recommendations for the SEC to consider.

Disclosures of ESG-related matters are critical to investors in markets, and it is imperative that public companies provide investors, the true owners of these companies, with this important information. However, it is just as important for us to ensure that public companies of all sizes are able to comply with these disclosure requirements.

To address this, my colleague, Representative Schrier, has introduced an amendment that requires the SEC to work with the Office of the Advocate for Small Business Capital Formation and the Office of the Investor Advocate to study the issues that smaller public companies face in disclosing ESG matters, and to make recommendations for the SEC to tailor these disclosure requirements to assist smaller public companies.

Ms. Schrier's amendment, along with Mr. Vargas' provision in H.R. 1187, will help smaller public companies by ensuring that the SEC is factoring in the unique issues that smaller public companies face while also creating clear, consistent regulatory standards that reduce regulatory uncertainty, all while providing investors and markets with this critical information.

Mr. Speaker, on that I demand the yeas and nays. The SPEAKER pro tempore. Pursuant to section 3(s) of House Resolution 8, the yeas and nays are ordered.

Pursuant to clause 8 of rule XX, further proceedings on this question are postponed.

Amendment No. 10 Offered by Ms. Plaskett.

Mr. Speaker, I understand that my friend and colleague, Ms. Plaskett, has raised some concerns about the treatment of territories in this bill, and I want to assure her that the staff has done everything possible in the bill text to ensure that territories are included in this bill and not treated disparately.

The language in this bill is consistent with regulations promulgated under the Obama administration regarding country-by-country tax reporting, which were carefully written to ensure territories were not excluded.

I want to make clear that nothing in this bill should be intended to suggest that territories are tax havens. In fact, I have worked with my colleague, Mr. San Nicolas, on this bill text. We believe that the enhanced disclosures in this bill, which will include territories, should help encourage investment in the territories and hold corporations accountable for lack of investment in territories.

I want to ensure Ms. Plaskett that I take her concerns seriously, and I intend to work with her to make sure that what she is identifying as perhaps incorrectly being defined as tax havens is an issue that I will deal with.

Mr. Speaker, I yield myself such time as I may consume.

I am opposed to this bill, and I rise in opposition to H.R. 1187.

Mr. Speaker, today, my Democrat colleagues, once again, are seeking to hijack our securities laws to push leftwing political and social agendas, despite dressing it up as investor protection.

Make no mistake, this bill will increase costs on publicly owned companies, discourage private companies from going public; and, frankly, could encourage not only private companies to stay private, but even have and entice public companies to go back to being private companies.

This is going to result in fewer investment opportunities for everyday American investors, also known as our constituents, who are saving for retirement, a college education or simply looking to just build a better life.

In short, this bill will increase the number of government-directed, mandatory disclosure requirements on publicly traded companies, which will increase compliance costs on companies and divert company resources that could have been used to create more jobs.

Now, to be fair, this is a job-creation bill. However, the only jobs created by this bill will be for a special tranche of attorneys, corporate compliance coordinators, and the occasional scientist; not exactly what an economist would call productive-types of jobs.

Under this bill, public companies would be required to disclose:

Environmental, social, and governance issues, as well as climate risk. These metrics would be set by the Securities and Exchange Commission, not Congress;

Descriptions of any expenditure for political activities and donations to political candidates or trade organizations by executives, these are duplicative of existing requirements, for example;

The ratio between the pay raise percentage of the company's executives and the pay raise percentage of the company's median employee. This is, in some ways, duplicative of the mandatory CEO pay ratio disclosure that Democrats put into the Dodd-Frank Act, which itself is an especially useless metric; country-by-country tax and financial reports from multinational enterprises. This will upend the current country-by-country tax reporting rules overseen by the IRS.

Mr. Speaker, let's be clear. My friends across the aisle are using the Federal securities laws to implement their partisan wish list of social policy priorities. They are doing it through mandatory disclosure regimes that are, at best, tangentially related to actual investment decisions.

To be clear, if information presents a material investment risk to a publicly traded company, the company is--wait for this--already required to disclose it. That information is out there for those companies that have material risk.

Materiality has been, and continues to be, the touchstone of our public company disclosure regime for more than eight decades and has actually even been affirmed by the U.S. Supreme Court. It has held the test of time, and we simply cannot just discard it to appeal to the Democrats' progressive agenda.

Our capital markets are the best in the world in no small part because materiality is the basis of our disclosure regime here in the United States, yet my Democrat friends, apparently, want to throw it all away for the sake of appealing to leftwing stakeholders.

Additionally, H.R. 1187 will greatly expand the SEC's jurisdiction by requiring the SEC to promulgate disclosures on environmental, climate change, political spending, tax reporting, and foreign policy issues, among others.

This is not the sweet spot for the SEC. It does not have the experience in any of these issues, and is not the appropriate entity for determining these metrics or industry standards, nor is the Securities and Exchange Commission the appropriate entity to review and enforce such disclosures.

The SEC knows how to regulate materiality. That is their expertise. They are not climatologists or climate scientists. They are not election law experts. And they most certainly do not know international tax law. That is the purview of the EPA, NOAA, the FEC, and the IRS.

Furthermore, smaller public companies will bear the burden of additional compliance costs. This bill fails to account for the impact it will have on smaller businesses and companies, especially those who are looking to go public. Or maybe I should say, were looking to go public. They certainly do not have the infrastructure or resources to spend on fixed costs of compliance like this.

H.R. 1187 will result in fewer investment opportunities for American investors. It will discourage private companies from going public and encourage public companies to go private to avoid these burdensome new nonmaterial and useless disclosure requirements.

Sadly, this will hurt the everyday investors, our constituents, that the Democrats claim they want to help. In other words, this bill stands to harm everyone saving for retirement, a college education, or just looking to build a better life.

This is just a bad bill, and I urge a ``no'' vote on H.R. 1187.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 4 minutes to the gentleman from Arkansas (Mr. Hill), a leader on this issue.

Mr. Speaker, I yield 4 minutes to the gentleman from Kentucky (Mr. Barr), who has been an outstanding voice on these particular issues.

Mr. Speaker, I include in the Record the following letters, a June 14 letter from the National Association of Manufacturers, a June 15 letter from the U.S. Chamber of Commerce, and a June 16 letter from the American Securities Association, all in opposition to this bill.

National Association of

Manufacturers,

June 14, 2021

House of Representatives,

Washington, DC.

Dear Representative: On behalf of the National Association

of Manufacturers, I write to express opposition to H.R. 1187,

the Corporate Governance Improvement and Investor Protection

Act.

Manufacturers are taking the lead in innovating solutions

to climate change, ensuring clean air and water, and

enhancing diversity and inclusion--and, importantly, in

providing information about this critical work to their

investors. Public company reporting related to climate change

and other environmental, social, and governance topics should

allow for principles-based disclosure of financially material

information relevant to these efforts. The NAM is concerned

that the ESG Disclosure Simplification Act, the Shareholder

Political Transparency Act, the Greater Accountability in Pay

Act, and the Climate Risk Disclosure Act would impose

disclosure mandates that focus on costly one-size-fits-all

metrics rather than material, decision-useful information for

investors.

Similarly, the Disclosure of Tax Havens and Offshoring Act

would impose a significant compliance burden--while also

risking exposure of valuable and proprietary data--by

requiring public reporting of country-by-country tax

information by U.S. companies. The United States' support for

Action 13 of the OECD/G20's BEPS country-by-country reporting

initiative was based on the requirement that these reports,

which are exchanged between the IRS and other tax

authorities, would remain confidential.

The NAM is engaging with the Securities and Exchange

Commission as it considers ways to enhance the comparability

of climate and ESG information disclosed by publicly traded

companies. Manufacturers are hopeful that any new climate or

ESG reporting framework will be flexible, principles-based,

and materiality-driven while providing clarity to publicly

traded companies and supporting their efforts to furnish

material information to investors in a comparable manner. We

encourage Congress to provide appropriate oversight of the

SEC's ongoing work without mandating a one-size-fits-all

approach.

Sincerely,

Chris Netram,

Vice President, Tax and

Domestic Economic Policy.

Mr. Speaker, I yield 2 minutes to the gentleman from Florida (Mr. Donalds), who is a new Member to this House Chamber and an outstanding Member.

Mr. Speaker, I yield an additional 30 seconds to the gentleman from Florida (Mr. Donalds).

Mr. Speaker, I include in the Record an article from The Wall Street Journal dated from 2018, ``California Public Employees Vote Against Pension-Fund Activism.''

[From the Wall Street Journal, Oct. 18, 2018]

California Public Employees Vote Against Pension-Fund Activism

(By Paul S. Atkins)

Playing politics with other people's savings is never

popular.

The California Public Employees' Retirement System this

month said no thank you to pension-fund activism. Government

workers unseated Priya Mathur, the sitting Calpers president.

She was defeated by Jason Perez, a police-union official who

criticized Ms. Mathur's focus on environmental, social and

governance investing, or ESG. Mr. Perez emphasizes the

agency's fiduciary duty to maximize investor returns.

Calpers represents almost two million California public

employees, retirees and families. Yet it mostly makes

headlines for its activism, such as divestiture from the

tobacco industry. ``It's been used more as a political-action

committee than a retirement fund,'' said Mr. Perez. ``I think

the public agency [employees] are just sick of the

shenanigans.''

Americans have always invested to achieve personal goals,

such as saving for a house or their kids' college tuition.

Some find that an ESG or issue-specific approach to investing

accords with their personal philosophies. There is nothing

wrong with people investing their own money however they

like. But Calpers has a fiduciary duty to California public

employees, who rely on it for retirement security.

Hester Peirce, a commissioner of the Securities and

Exchange Commission, recently observed, ``When a pension-fund

manager is making the decision to pursue her moral goals at

the risk of financial return, the manager is putting other

people's retirements at risk.'' The danger for Calpers is

real: In 2016 a consultant found that the fund's

beneficiaries missed up to $3 billion in investment gains

from 2001-14. The reason? A divestiture from tobacco holdings

for political purposes.

All this happens as Calpers remain underfunded. Worse, its

beneficiaries are stuck. They are locked into the system and

cannot vote with their feet.

While Calpers beneficiaries are demanding a renewed focus

on returns, activists continue to work other channels to

impose

agenda-driven requirements on public companies. Sen.

Elizabeth Warren last month unveiled a bill that would direct

the SEC to mandate that all public companies disclose fossil-

fuel use and greenhouse-gas emissions. This month a petition

signed by 17 law professors and institutional investors,

including Calpers, asked the SEC to develop mandatory rules

for public companies to disclose ESG information.

The petition argues that since there are already so many

requests to the SEC for issue-specific disclosures human-

capital management, climate, tax, human rights, pay ratios by

sex, and political spending--the agency should impose a

broader ESG disclosure framework. The laundry list of

possible disclosures underscores the problem. Requiring

companies to account for an ever-changing list of hard-to-

quantify social issues distracts from disclosure's real,

statutory purpose: giving the reasonable investor material

information he needs to make investing decisions.

These proposals always tout purported benefits to

investors, but mandatory disclosure of additional immaterial

information would be harmful. In a 2013 speech, former SEC

Chairman Mary Jo White decried the ``information overload''

in already bloated annual reports that obscures pertinent

disclosures for investors amid a sea of extraneous

information. She summarized: ``What some investors might want

may not be what reasonable investors need.'' Translation:

More information is not necessarily better information.

Mandating politicized corporate disclosures doesn't align

with the SEC's mission to protect investors and facilitate

capital formation. Instead, it would divert resources away

from business operations and growth. It is simply an attempt

to shame public companies into compliance with activists'

demands.

As Mr. Perez put it, criticizing a proposal to divest from

some gun retailers earlier this year: ``This is nothing more

than a political ploy.'' His push to prioritize performance

over politics clearly resonated with California public

employees; lawmakers and pension-fund managers should take

note.

Mr. Speaker, I yield 3 minutes to the gentleman from Tennessee (Mr. Rose), and I thank him for his work on the Financial Services Committee.

Mr. Speaker, could I inquire as to the remaining time on each side?

Mr. Speaker, I yield 1 minute to the gentleman from Wisconsin (Mr. Fitzgerald).

Mr. Speaker, just a point of information for the chair from California: We have one more speaker, and I will be prepared to close.

Mr. Speaker, I yield 5 minutes to the gentleman from Kentucky (Mr. Barr).

Mr. Speaker, I yield myself the balance of my time. I want to make sure we are clear not only with my colleagues but to those who may be listening and watching today.

Our side of the aisle has a couple of problems with this legislation today. First and foremost is the structure; next is the content; and then third, we have to question motivation.

What is the problem with the structure?

My friend from Connecticut talked about an issue that we have a lot of agreement on, and I say to him: Amen, hallelujah, let's talk about cybersecurity. Let's talk about how corporations are going to be held responsible for that.

However, my colleague from Iowa is talking about corporate tax law and country-by-country tax reporting. Now, that might be a good issue, but it is the wrong committee. I wondered to myself if Chairman Dingell, who chaired the Ways and Means Committee for a few decades, and my colleague from Michigan, would have allowed this committee mission creep. Actually, I don't wonder. I know exactly what he would have said: Hell, no. This is in my committee.

This issue is in the wrong committee, and Financial Services is not the right and proper place to be doing that.

Let's look at the content of these bills. We are not debating climate, and we are not debating these social issues that need to be addressed. We are debating who is responsible for enforcing these. We are not debating the failures and flaws of humans. We are questioning who should be the enforcer of these regulations and if they are equipped to do so.

Now, not that long ago, before defunding the police was a popular item to discuss, the SEC was commonly called on all sides the cop on the beat. They were the cops on the beat who were the enforcers. They were the ones who were coming along and saying: We are going to make sure that there is no fraud as we protect investors; we are going to make sure that we have efficient markets; and we are going to make sure that we are building capital.

Here is the problem: They are not prepared and equipped to do so.

Don't take my word for it. Let's look at President Obama's head of the Securities and Exchange Commission, Mary Jo White, who said: ``When disclosure gets to be too much or strays from its core purposes, it can lead to `information overload,' a phenomenon in which ever-increasing amounts of disclosure make it difficult for investors to focus on the information that is material and most relevant to their decisionmaking as investors in our financial markets. To safeguard the benefits of this `signature mandate,' the SEC needs to maintain the ability to exercise its own independent judgment and expertise when deciding whether and how best to impose new disclosure requirements.''

She also said at one point that the Securities and Exchange Commission was not prepared to do enforcement on areas that they had no expertise. She was referring to conflict minerals. That was also part of the Dodd-Frank Act.

So, we have a number of issues that are in this content. Earlier, my colleague, the chair from California, submitted a letter from CalPERS in support of this. Earlier, just prior to that, I had submitted an article from The Wall Street Journal where CalPERS had actually had a massive regime change--this was in 2018--regarding this pension fund activism.

At the time, Mr. Perez, who was elected as the president of CalPERS, said:

CalPERS has been used more as a political action committee

than a retirement fund. I think the public agency employees

are just sick of the shenanigans.

Hester Peirce, a Commissioner with the Securities and Exchange Commission, recently observed: ``When a pension fund manager is making the decision to pursue her moral goals at the risk of financial return, the manager is putting other people's retirements at risk.''

She was referring to the person whom Mr. Perez had beaten in that election.

The danger is real. In 2016, a consultant found that the CalPERS fund beneficiaries missed up to $3 billion in investment gains from 2001 to 2014. The reason? A divestiture of tobacco holdings for political purposes.

I wonder if this might be why some of the motivation for those on the other side, that they want to cover themselves. They want to make sure they are not open to the liability of retirees or others with a fiduciary being held responsible for bad decisionmaking when they use these amorphous, nondefined issues to make political statements rather than investment choices.

Madam Speaker, at the end of the day, what we have here is a problem not just of the issues but of the enforcement. I believe that if we are asking the ``cop on the beat,'' the Securities and Exchange Commission, to do a job that is up to the streets and maintenance department, then no one could expect that they are prepared for that. How can we expect that they are going to be able to do this?

With that, and including my opening statement where we looked at the disincentive to make sure there are more investment opportunities for everyday investors--our constituents--I must remain opposed to H.R. 1187.

Madam Speaker, I yield back the balance of my time.

Madam Speaker, I rise in opposition to the amendments en bloc, and I yield myself such time as I may consume.

Madam Speaker, let's be honest. If the original bill wasn't bad enough, Democrats' en bloc amendments complete the picture. With this amendment, Democrats are packaging even more non-investment-relevant social priorities that only serve to feed protesters and dissidents with information to be used in naming and shaming companies.

I had mentioned earlier that in some of the bills in this package, we have some potential impossibility of working with each other. There are others that don't belong in our committee.

Then there are other bills that don't make sense if we really, truly are trying to protect investors from fraud and trying to build capital in our country, which is the directive of the Securities and Exchange Commission.

Let's look at some of the specific information companies would be required to disclose under these amendments and how it benefits everyday investors.

Take the workforce and human capital management disclosure amendment, for example. How exactly is a company supposed to measure and disclose, in a comprehensible and comparable manner, ``employee engagement'' and ``alignment with business strategy''?

Additionally, how does disclosing the company's policies relating to ``freedom of association and work-life balance initiatives'' help everyday investors evaluate the risks of investing in that company?

My friends on the other side have been pretty adamantly opposed to Robinhood, but those who are looking to use Robinhood might actually like that work-life balance. That is kind of millennial type of language that is being used in here.

This amendment might as well require companies to disclose their policy on dogs in the office and whether their canine coworkers are purebreds or mixed breed types of rescue dogs. This doesn't have relevance and materiality to investors.

It is also worth highlighting an amendment that requires American companies to disclose whether the company or an affiliate of the company directly or indirectly engaged with an entity or the affiliate of an entity regarding the importation of not only goods from the Xinjiang Uighur Autonomous Region but also goods that have materials originally sourced from the XUAR.

Well, this is a redo from last Congress, and now that Democrats have one-party control, their motives are clear. The bill requires companies to show if their affiliates are indirectly engaged with affiliates of certain companies.

To put it simply, American companies would be required to disclose unknowable information and face securities fraud charges for any misstatements or omissions.

Now, let's not have any doubt: This side of the aisle has been highlighting the Uighur situation for a very long time through bills, through amendments, through sanctions, advocating those and holding China and the CCP responsible.

But, again, under this legislation, they will violate the law for trying to disclose unknowable information.

Why would a company want to go public under that regime? And how does disclosing such indecipherable information help everyday investors make more informed investment decisions?

Now, just to make sure my Democrat friends don't twist my words, like I said, I very much care about the Chinese Communist Party's human rights abuses. We need to be focused on that. I think many of the underlying concerns that motivate this legislation and amendment are important. But the public company disclosure regime is simply the wrong vehicle for addressing those concerns.

The SEC's mission is to: one, protect investors from fraud; two, maintain fair, orderly, and efficient markets; and, three, facilitate capital formation. These packages of bills do not do that, and nothing in the SEC's mission looks remotely like enforcing foreign policy goals or labor law.

Mary Jo White had pointed that out regarding the conflict minerals portion of the Dodd-Frank law. Once again, Democrats are more than comfortable with shoving the SEC into subject matter areas where they have zero expertise rather than getting the policy right.

There are real downsides to this approach my colleagues are taking. Mandatory disclosure increases compliance costs. The more complicated and technical the information required to be reported in disclosures, the more specialized the attorneys and compliance experts a company needs to adhere to a law.

If I need to spell that out for you, that is money that companies cannot spend on its workforce and investing in their business, in equipment, and in their wages, or returning money to everyday investors who have invested in those companies.

Moreover, just to be clear, because my Democrat friends keep talking about how badly investors want this information, under the disclosure requirements in these amendments, everyday investors aren't the ones who benefit. Social activists, as well as compliance professionals-- that is, lawyers and accountants--are the ones who will reap the biggest reward under these amendments.

We are helping the elite workforce with the bill and these amendments. Instead of helping investors participate in our capital markets and helping American workers, these amendments will leave everyday investors buried in disclosures that are, at most, tangentially related to investment.

Meanwhile, smaller public companies with shoestring compliance budgets will have to delay raising wages for workers in order to reallocate that capital to hiring more lawyers.

At its core, this amendment just heightens the key problem with the original bill. The additional disclosures will disincentivize private companies from going public, which will inhibit everyday investors, our constituents, from participating in our capital markets and will limit their choices of public companies to invest in.

Let's not eliminate access and opportunities to everyday investors, especially when rich investors will still have access to investing in companies that have gone private or stayed private in response to these amendments.

I think that is one of the things, Madam Speaker, that is getting lost in this. Those that have will continue to have those options. Those that are trying to build a future are going to get frozen out once again.

For that reason, I oppose this amendment, and I reserve the balance of my time.

Madam Speaker, I am prepared to close, and I reserve the balance of my time.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, I yield myself such time as I may consume to close.

Madam Speaker, this was claimed earlier by one of the authors that investors wanted this information, I believe was the quote.

Well, I ask the question: If investors want this information, as claimed, then they can bring a vote to the shareholders to require these disclosures. Evidence, Madam Speaker, would dictate and show that precious few of these types of issues have actually been brought to shareholder meetings, where they are voted on. In the rare times that they have, even fewer have actually been approved.

So, no, investors don't look at this information. They don't want this information, and they don't view it as material to the investment decisions that they are making.

So you have to ask the question, then: Who is requiring or requesting this information? I suspect it is more about appeasing social activists. It is not about the workers and it is certainly not about the investors. This is about making sure that the virtue signaling that is required in today's corporate world--may I add, for large corporations, because there are plenty of small and medium-sized, even publicly traded companies that are bucking this.

But for these large corporations who have massive, massive compliance departments that are chock-full of attorneys, chock-full of CPAs and others that are going to work through this, and they are going to hire their friends in the consulting world to make sure that they are dotting the I's and crossing the T's, that is who it is really about.

Sadly, unfortunately, who ultimately ends up losing in that equation is the worker and the investor, our constituents.

Madam Speaker, with that, I yield back the balance of my time.

Mr. Speaker, I claim the time in opposition to this amendment, although I am not opposed to it.

Mr. Speaker, I appreciate the goals of this amendment, and I applaud my colleague from Washington. We should be concerned about the effects of this bill and ESG reporting on small businesses, and I would say that this is a step in the right direction.

However, I don't believe this amendment actually goes far enough. The ranking member of the full committee submitted an amendment to the Rules Committee that would have exempted small businesses from the onerous and unnecessary requirements of this bill, and, sadly, that amendment was not made in order. I think that may have achieved the same goal in a certainly much more clear manner for the author.

This bill will be particularly burdensome on small businesses that don't have the resources to pay all the expenses associated with complying with these disclosures, such as lawyers, accountants, and other ESG consultants.

I know the chairwoman had mentioned that somehow my statements earlier and the statements of my colleagues were supportive of large business and their support of this. It is actually the exact opposite. I could really care less what the Fortune 50 think about this.

I am concerned about that bottom 50. I am worried about those up-and- coming companies that are going to have those precious resources sucked into more compliance that, again, does not have relevance or materiality to investors, nor is it actually requested by investors.

But this bill is a prime example of Wall Street versus Main Street, and I commend my colleague for fighting for Main Street with this amendment.

I am prepared to accept this amendment because I hope it will help small businesses.

Mr. Speaker, I continue to support this amendment, and I am happy to accept it.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I thank Ranking Member Huizenga for the time on the floor today.

Mr. Speaker, I would say to my friends on the other side of the aisle: We are not debating climate change here. We are debating the proper way to financially disclose risks on financial statements of companies that may or may not experience impact from climate change.

No one is over here denying about climate. We are here talking about what the right way is to do this. And H.R. 1187 is not the right way to do climate disclosure on behalf of taxpayers, shareholders, and employees of public companies.

I have spent the better part of four decades in leadership in both public and private companies, and I have been engaged throughout those years in calling for quality corporate governance practices. I can say with absolute authority that mandating these disclosures as outlined in H.R. 1187 is not only not necessary but would be expensive and lead to increased litigation costs.

As my colleagues have already said, the information is already to be disclosed if it meets the materiality standard. The idea of materiality has been refined over many decades, and it is what makes our capital markets the envy of the world.

As Justice Marshall stated in the Supreme Court opinion from 1976: ``Some information is of such dubious significance that insistence on its disclosure may accomplish more harm than good. . . . If the standard of materiality is unnecessarily low . . . management's fear of exposing itself to substantial liability may cause it simply to bury the shareholders in an avalanche of trivial information, a result that is hardly conducive to informed decisionmaking.''

We articulated this in a letter to the SEC that my colleagues and I sent regarding their plans for financial disclosure. In that letter, signed by 22 of my Republican colleagues in the House, we outline our concerns about the SEC going far afield of its statutory mission to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.

We also warn that the nature and scope of climate change disclosure rightfully depends on a particular company's business line and their carbon footprint. One-size-fits-all, uniform mandates would be deeply misguided for an issue as complex as the impact of the climate over many, many years on individual businesses.

This rings more true here in Congress. Congress does not know what is best for a public company. These decisions are best left up to the board that already has a fiduciary obligation to its shareholders to manage this kind of issue.

Our publicly traded companies are responsive to shareholder engagement. Over the last two decades, they have dramatically improved their governance practices by increasing diverse, independent directors and increasing their boards' attention to the business judgment rule and fiduciary duty of care.

Look at Procter & Gamble as just one U.S. iconic company. In 2000, their annual proxy statement was 56 pages. Today, it is 111 pages.

Like the vast majority of public companies in the S&P 500, P&G has significant disclosures of ESG initiatives, their political contributions, and their sales around the world.

Let's not make it more difficult for public companies. As policymakers, we should be promoting policies that bolster investment options for Americans, not limit them. This bill limits that.

Mr. Speaker, I encourage my colleagues to vote against the legislation.

Mr. Speaker, I have an amendment at the desk.

Mr. Speaker, as I noted in our debate earlier today, I stand in opposition to the legislation en bloc offered by the majority, and that is why I am offering an amendment that replaces the entire underlying bill with a study to be conducted by the Securities and Exchange Commission.

The amendment would require the SEC to summarize and describe any inconsistencies in the methodologies related to environmental, social, and governance metrics before--repeat, before--they mandate any type of disclosure from public companies.

My amendment will provide us with much-needed information on the differences between the five or six standard setters, among many others, currently in the market. They all have different approaches and ways to measure climate and other ESG risks. This causes confusion, Mr. Speaker, and turmoil, both for the public companies trying to determine these metrics and issue their financials and for investors trying to understand what has been disclosed.

As we have discussed during the general debate, H.R. 1187 is a compilation of five different bills. During this amendment debate, I want to focus particularly on the bills offered by the gentleman from California (Mr. Vargas) and the gentleman from Illinois (Mr. Casten).

When we marked these bills up in the Financial Services Committee, I pointed out that even though Democrats believe these bills are in alignment, as they both address the need for climate-related disclosure, they are in tension with one another.

For example, Congressman Vargas' bill suggests that a disclosure system is sufficient by providing an annual report describing the long- term ESG strategy and ESG-related metrics, which presumably would include climate risk.

On the other hand, Congressman Casten says that a disclosure should report the same metrics, but additionally needs to disclose the social and human impact of a company's actions, analyze how the company's reputation might be affected by climate, detail the board's oversight, and has a long list of statutory additions.

The Democrats often say that we need to mandate measuring climate risk because this is science. But Deloitte & Touche reported that science has not agreed on the methodology for measuring climate risks, and even when companies try to measure these risks, the information isn't measured consistently, timely, and in a relevant way, increasing uncertainty.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, we are not in Kansas anymore, since we are using ``Wizard of Oz'' analogies. To put a finer point on it, we are not debating climate. We are debating the right way to disclose financial risk for climate, from climate.

To put a finer point on it, a report released by the Governance & Accountability Institute features a breakdown of all the Standard & Poor's 500 publicly traded companies that are currently disclosing climate risk and which standard setter they are using.

The outcome shows that 51 percent use one company, 14 percent use another, and 5 percent use another. Vastly different outcomes. And, in fact, the bill proposed by the majority dictates which one of those should be used, and it happens to be the one that only 5 percent of companies are currently using.

So there are five or six of these different standard setters out there, and it is important for the commission to figure out which one of these makes the most sense before we mandate in a rulemaking.

Bogging down these companies with additional, unclear, unwieldy disclosures just to prove a political point is not just unfair, it is expensive. It leads to increased litigation risk and hurts long-term capital formation. This is not how we should be operating as policymakers and precisely why I am offering this amendment to get the work done right up front before it turns into another government mandate.

My amendment is simply good governance. It will replace the bill with a study of all disclosure frameworks related to the environment, social and governance metrics, as well as those particularly related to climate that any public company may use when making disclosures to our investors, whether voluntarily or pursuant to a statute. And it would analyze the differences and conflicting factors between the reporting frameworks. This information is what we need in Congress, and we should be able to review it before drafting, let alone voting on legislation that will lead to a mandated new disclosure framework.

Mr. Speaker, my amendment is simply good governance that will replace the bill with a study, and I believe that is the right way to go. I urge my colleagues to support this.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I thank my friend from Michigan.

Mr. Speaker, I rise today in opposition to H.R. 1187, with all due respect to my good friends from California and Illinois. We have enjoyed a robust discussion and debate on this, which I would argue is a very important topic.

Mr. Speaker, the statutory mission of the Securities and Exchange Commission is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. Its mission, though, is not to reduce carbon emissions. Its mission is not to solve climate change.

Now, those may be laudable public policy objectives, but they are best handled by the Congress or other Federal agencies. This is simply not the job of the SEC.

This bill is, unfortunately, the next episode in the Democrats' saga to weaponize financial regulation to achieve partisan social and environmental goals. Congressional Democrats and the Biden administration know that they cannot pass the Green New Deal and other extreme far-left policy priorities through a Democrat-majority Congress, so they are corrupting an independent Federal financial regulator to do their bidding.

The majority claims that this bill is an effort to improve corporate governance when, in reality, it is a thinly veiled attempt to open a back door to achieve their socialist wish list and cut off financing to legal but politically unfashionable industries that they despise.

The result will be higher energy costs for the American people, a regressive energy tax on the people in this country who can the least afford it.

As always, the Democrats think that the government knows best and is better equipped than the private market to meet demand. They give no consideration to the impacts of significant cost increases, the bill's effect on retail investors, or the actual utility of the information they are requesting and its materiality for informing investment decisions.

My friend from Arkansas (Mr. Hill) made this point. But the seminal Supreme Court case that defines the materiality standard was TSC Industries v. Northway. In that majority opinion, Justice Thurgood Marshall wrote, and it bears repeating: ``If the standard of materiality is unnecessarily low, not only may the corporation and its management be subjected to liability for insignificant omissions or misstatements, but also management's fear of exposing itself to substantial liability may cause it simply to bury the shareholders in an avalanche of trivial information, a result that is hardly conducive to informed decisionmaking.''

So, this is not about investor protection. This is about weaponizing Federal securities law to discriminate against law-abiding American energy companies. This is an effort to pick winners and losers in the marketplace by the government. It is an effort for central planning of our economy. It is not about markets. This is about market distortion by the Federal Government.

In committee, I tried to make a commonsense change to ensure the bill covers only material information so that investors aren't buried by that avalanche. The majority rejected my amendment. This shows they are more interested in naming and shaming companies than providing useful information to investors.

Mr. Speaker, my last point is this: the job of the SEC is to protect investors, but this bill would compromise investor returns by elevating nonpecuniary factors above and ahead of financial performance.

How do we know this? Because fees of ESG funds are 43 percent higher than non-ESG funds. And many low-ranked ESG stocks not only outperformed top-ranked ESG stocks, they outperformed the market overall.

We must not harm American investors. We must not harm American retirement savers by subordinating investor returns to promote nonpecuniary policy objectives like social justice, diversity quotas, and lower carbon emissions.

Financial regulations should not be a tool for social change.

Mr. Speaker, I thank the gentleman for yielding.

Mr. Speaker, once again, the bill we have been considering today is puzzling for Republicans, as it probably is for a large number of my Democratic friends as well.

On the one hand, the far left seeks to blame so much of what is bad in the world on large public companies. But then they turn around and claim that these same companies will see the light and embrace extreme leftwing policies if only they disclose more of their activities in obscure SEC reports. Mind you, these are perfectly legal activities, too.

But no serious Member of the House can believe the world works like this. The far left wants to claim they are heroes using the Securities and Exchange Commission to fight the scourges of our time, from foreign dictatorships to environmental degradation. But in reality, they are weaponizing financial regulation, and their support for this bill comes in the form of empty political rhetoric masquerading as sound corporate governance. Make no mistake, Mr. Speaker, this bill is about politicizing securities regulation.

Far from this fantasy land live the majority of House Members who understand that there are actual urgent problems we can solve only if we work together to address them.

Perhaps the gravest of these problems is represented by the goals of the Chinese Communist Party, which is perpetrating the great crime of our age against the Uighurs and other minorities in China. Beijing is also working to stamp out the vibrant democratic

culture in Hong Kong, hoping all the while that Congress will look the other way.

If we are truly concerned by public companies that may be working with bad actors--particularly bad actors responsible for China's worst human rights abuses--then burying their names on the SEC's website will achieve absolutely nothing. We need to ensure that they are referred to the Treasury Department so that we can impose sanctions, and that is what my motion to recommit will do.

Under this MTR, instead of reporting on malign Chinese companies to the SEC--an agency that has long acknowledged its lack of expertise and, frankly, its lack of capability and interest in pursuing foreign policy goals--we will instead make sure that entities in corporate supply chains are flagged for the Treasury when public companies have reason to believe they are involved in atrocities in Xinjiang, from mass surveillance to forced labor and other violations of basic human rights.

Companies will also be able to sound the alarm on entities complicit in China's assault on Hong Kong's freedoms, allowing OFAC at the Treasury to determine whether it can impose new sanctions.

We must cut off offenders from the global economy until China changes course. We must rely on appeals to their bottom line and not their conscience. That is the power of U.S. sanctions.

Mr. Speaker, if we adopt the motion to recommit, we will instruct the Committee on Financial Services to consider my amendment to H.R. 1178. My amendment doesn't pretend we can fight genocide, authoritarianism, mass detentions, mass surveillance, and other human rights violations with meaningless rhetoric on corporate transparency, none of which keeps China's leaders up at night.

There are over 1 million Uighurs detained in China and over 100 facilities covering millions of square feet suspected as sites of forced labor. It is an insult to Beijing's victims to claim that disclosure tweaks from the SEC will stop this. Securities regulation will not stop this.

Mr. Speaker, we can either pass half measures that we know won't work and then wring our hands later when the problem remains unresolved, or we can articulate what we want to target and take real action. The former is beneath the dignity of this House.

Measly disclosures in securities filings, transforming 10-Ks from 100 pages to thousands of pages, that is not going to solve the problem. The former is beneath the dignity of the House. The latter is embodied in my amendment: sanctions, OFAC using the power of the U.S. Department of the Treasury.

Mr. Speaker, I ask unanimous consent to insert the text of my amendment in the Record immediately prior to the vote on the motion to recommit.

Mr. President, social media platforms have become a pretty significant part of Americans' lives. We use them to stay up to date on news from friends and family--something that has become especially essential during the pandemic--to communicate with relatives and friends, for entertainment, and as a shopping resource. Social media sites provide ways to network, to connect with like-minded individuals from fellow theater lovers to fellow basketball fans, to advocate for causes that we believe in, to conduct business, even to date, and more and more we rely on social media sites as a primary source of news and information, from Presidential election news to updates on COVID vaccinations.

Social media offers a lot of benefits and opportunities, but the increasing dominance of social media, particularly in the news and information space, has also raised concerns. Consumers have become increasingly troubled about the way their information is used by social media platforms and how these sites decide what news and information we see. And there are increasing numbers of anecdotes to suggest that some social media platforms are moderating content in a biased or political way.

Currently, content moderation on social media platforms is governed by section 230 of the Communications Decency Act, which was enacted into law 25 years ago. Section 230 provides internet sites that host user-generated content--sites like YouTube or Twitter or Facebook--with immunity for the content that users post on their sites. So, for example, if somebody posts a video on YouTube that contains illegal content, YouTube isn't held legally responsible for that content.

Section 230 has been critical to the development of the internet as we know it today. Without section 230 protections, many of the sites we rely on for social connection or news or entertainment would never have come into being.

But as the internet and social media have grown and developed, it has also become clear that some changes need to be made. In particular, it has become increasingly clear that sites need to provide greater transparency when it comes to their content moderation practices and decisions. Social media sites are no longer just providing a platform for user-generated content as they did in their infancy. They are now making a lot of decisions about that content and carefully shaping our social media experience--what ads we see, what posts we see, what news stories we see.

Currently, Federal law does not require that social media sites be at all accountable to consumers for those content moderation decisions. That is why, today, I am introducing the Platform Accountability and Consumer Transparency Act, or the PACT Act, along with my colleague Senator Schatz. Our bill would preserve the benefits of section 230, like the internet growth and widespread dissemination of free speech it has enabled, while increasing accountability and consumer transparency around content moderation.

Now, content moderation is certainly not all bad. For example, most of us are happy to have YouTube or Instagram suggest additional content that matches the music that we like to listen to or the hobbies that we are interested in. The problem is that content moderation has been and largely continues to be a black box, with consumers having little or no idea how the information they see has been shaped by the sites that they are visiting.

The PACT Act would address this problem by increasing transparency around the content moderation process. Sites would be required to provide an easily digestible disclosure of their content moderation practices for users, and, importantly, they would be required to explain their decisions to remove material to consumers.

Until relatively recently, sites like Facebook and Twitter would remove a user's post without explanation and without an appeals process. And even as platforms start to shape up their act with regard to transparency and due process, it is still hard for users to get good information about how content is moderated.

Under the PACT Act, if a site chooses to remove your post, it has to tell you why it decided to remove your post and explain how your post violated the site's terms of use. The PACT Act would also require sites to have an appeals process. So if Facebook, for example, removes one of your posts, it would not only have to tell you why, but it would have to provide a way for you to appeal that decision.

We have seen increased concern lately about news articles being removed from social media sites. Under the PACT Act, a newspaper whose article was posted on Facebook or Twitter and then removed by one of those platforms could challenge Facebook or Twitter, which would have to provide a reason for removing the article and allow the newspaper to appeal the decision.

The PACT Act would also help us develop the data necessary to demonstrate whether social media platforms are removing content in a biased or political fashion. As I said earlier, there has been increasing concern about biased content moderation on social media sites. The PACT Act requires detailed transparency reports every 6 months from large social media platforms, like Twitter and Facebook, which will provide the data it needed to determine whether and where biased moderation exists.

The PACT Act would also bolster efforts by State governments to hold social media platforms accountable. The bill would allow State attorneys general to bring civil lawsuits against social media platforms when these platforms have violated Federal civil laws.

The PACT Act would also require companies to remove material that has been adjudicated as illegal by a court. Internet platforms would be required to remove illegal content within 4 days. Failure to remove illegal material would result in the platform's losing its 230 protections for that content or activity, a provision that matches a recommendation made by the Trump Department of Justice for section 230 reform.

I am grateful to Senator Schatz for partnering with me on this legislation. Our bill is a serious, bipartisan approach to the issue of section 230 reform, and it would go a long way toward making social media platforms more accountable to consumers and increasing transparency around the content moderation process.

I invite our colleagues on both sides of the aisle to join us in advancing this legislation.