[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H. Res. 32 Introduced in House (IH)]

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118th CONGRESS
  1st Session
H. RES. 32

Supporting the current definition of materiality in the securities laws 
 and opposing new disclosure requirements outside the core mission of 
                the Securities and Exchange Commission.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 12, 2023

Mr. Joyce of Ohio (for himself, Mr. Steil, Mr. Stewart, Mr. Johnson of 
  South Dakota, Mr. Duncan, and Mr. Grothman) submitted the following 
 resolution; which was referred to the Committee on Financial Services

_______________________________________________________________________

                               RESOLUTION


 
Supporting the current definition of materiality in the securities laws 
 and opposing new disclosure requirements outside the core mission of 
                the Securities and Exchange Commission.

Whereas certain policymakers have demonstrated increased interest in evaluating 
        companies based on environmental, social, and governance or ``ESG'' 
        performance metrics;
Whereas certain policymakers have called for Federal agencies, including the 
        Securities and Exchange Commission (SEC), to require public companies to 
        disclose more ESG-related information;
Whereas the securities disclosure regime of the SEC has for decades been guided 
        by a standard of materiality first established by the Securities Act of 
        1933 and affirmed several times by the Supreme Court, including the 
        decision TSC Industries Inc. v. Northway Inc. (426 U.S. 438 (1976)), 
        which held that information is ``material'' (and subject to disclosure) 
        if ``there is a substantial likelihood that a reasonable shareholder 
        would consider it important in deciding how to vote'';
Whereas ``materiality'' depends upon whether information is important to an 
        investor at any time, making it a durable standard which provides a 
        framework for addressing new issues and ignoring issues which have lost 
        importance;
Whereas the materiality standard has been the bedrock principle governing 
        Federal securities disclosure law for over eight decades;
Whereas the materiality standard fosters strong capital markets that create a 
        competitive advantage for the United States by enabling the efficient 
        flow of capital and labor;
Whereas the materiality standard is critical for maintaining efficient 
        disclosure regimes that limit burdensome requirements, filter 
        unimportant information, and prevent confusing information overload for 
        investors;
Whereas, in 1976, Justice Thurgood Marshall writing for the majority in the TSC 
        Industries Inc. v. Northway Inc. decision noted that ``some information 
        is of such dubious significance that insistence on its disclosure may 
        accomplish more harm than good'';
Whereas certain policymakers intend to reorient the securities disclosure regime 
        to require disclosure of immaterial information to achieve social and 
        political goals;
Whereas the SEC is not tasked with or capable of formulating environmental or 
        social policy; its core mission is to protect investors; maintain fair, 
        orderly, and efficient markets; and facilitate capital formation;
Whereas to the extent that climate risks become material for a particular public 
        company, disclosure of those risks is already required;
Whereas SEC rules currently make explicitly clear that material effects of 
        climate change to the business must be disclosed (17 C.F.R. 211, 231, 
        and 241);
Whereas additional SEC climate disclosure regulations threaten to impose 
        expensive compliance costs and lessen investor enthusiasm for American 
        energy companies; and
Whereas capital markets regulations should not discourage investments which 
        would further United States energy independence: Now, therefore, be it
    Resolved, That the House of Representatives--
            (1) supports current law that defines materiality and has 
        guided the securities disclosure regime for decades; and
            (2) opposes new disclosure requirements outside the core 
        mission of the Securities and Exchange Commission, which burden 
        United States businesses and harm investors with information 
        overload.
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