[House Report 116-365]
[From the U.S. Government Publishing Office]


116th Congress    }                                    {        Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                    {       116-365

======================================================================



 
               ESG DISCLOSURE SIMPLIFICATION ACT OF 2019

                                _______
                                

January 7, 2020.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Ms. Waters, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 4329]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 4329) to provide for disclosure of additional 
material information about public companies and establish a 
Sustainable Finance Advisory Committee, and for other purposes, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     3
Background and Need for Legislation..............................     4
Section-by-Section Analysis......................................     5
Hearings.........................................................     7
Committee Consideration..........................................     7
Committee Votes..................................................     7
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................     9
Statement of Performance Goals and Objectives....................     9
New Budget Authority and CBO Cost Estimate.......................     9
Committee Cost Estimate..........................................    11
Unfunded Mandate Statement.......................................    11
Advisory Committee...............................................    11
Application of Law to the Legislative Branch.....................    11
Earmark Statement................................................    11
Duplication of Federal Programs..................................    11
Changes to Existing Law..........................................    11

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

  Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``ESG Disclosure Simplification Act of 
2019''.

SEC. 2. ESG DISCLOSURES.

  (a) In General.--Section 14 of the Securities Exchange Act of 1934 
(15 U.S.C. 78n) is amended by adding at the end the following:
  ``(k) ESG Disclosures.--
          ``(1) In general.--Each issuer the securities of which are 
        registered under section 12 or that is required to file annual 
        reports under section 15(d) shall disclose in any proxy or 
        consent solicitation material for an annual meeting of the 
        shareholders--
                  ``(A) a clear description of the views of the issuer 
                about the link between ESG metrics and the long-term 
                business strategy of the issuer; and
                  ``(B) a description of any process the issuer uses to 
                determine the impact of ESG metrics on the long-term 
                business strategy of the issuer.
          ``(2) ESG metrics defined.--In this subsection, the term `ESG 
        metrics' has the meaning given the term in part 210 of title 
        17, Code of Federal Regulations as amended pursuant to 
        subsection (b) of the ESG Disclosure Simplification Act of 
        2019.''.
  (b) Rulemaking.--
          (1) In general.--The Securities and Exchange Commission (in 
        this Act referred to as the ``Commission'') shall amend part 
        210 of title 17, Code of Federal Regulations (or any successor 
        thereto) to--
                  (A) require each issuer, in any filing of the issuer 
                described in such part that requires audited financial 
                statements, to disclose environmental, social, and 
                governance metrics (in this Act referred to as ESG 
                metrics); and
                  (B) define ESG metrics.
          (2) Sustainable finance advisory committee.--The Sustainable 
        Finance Advisory Committee established pursuant to section 4(k) 
        of the Securities and Exchange Act of 1934 shall, not later 
        than 180 days after the date of the first meeting of such 
        Committee, submit to the Commission recommendations about what 
        ESG metrics the Commission should require issuers to disclose.
          (3) Materiality.--It is the sense of Congress that ESG 
        metrics, as such term is defined by the Commission pursuant to 
        paragraph (2), are de facto material for the purposes of 
        disclosures under the Securities Exchange Act of 1934 and the 
        Securities Act of 1933.
          (4) Incorporation of international standards.--When amending 
        part 210 of title 17, Code of Federal Regulations (or any 
        successor thereto) pursuant to paragraph (1), the Commission 
        may, as the Commission determines appropriate, incorporate any 
        internationally recognized, independent, multi-stakeholder 
        environmental, social, and governance disclosure standards.
          (5) Location of disclosure.--Any disclosure required by 
        paragraph (1) may be included in a notes section of the filing.
          (6) Delay for small issuers.--The Commission may use a phased 
        approach when applying any amendments made pursuant to 
        paragraph (1) to small issuers and may determine the criteria 
        by which an issuer qualifies as a small issuer for purposes of 
        such phased approach.

SEC. 3. SUSTAINABLE FINANCE ADVISORY COMMITTEE.

  Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is 
amended by adding at the end the following:
  ``(k) Sustainable Finance Advisory Committee.--
          ``(1) Establishment.--The Securities and Exchange Commission 
        (in this subsection referred to as the `Commission') shall 
        establish a permanent advisory committee to be called the 
        `Sustainable Finance Advisory Committee' (in this subsection 
        referred to as the `Committee').
          ``(2) Duties of committee.--The Committee shall--
                  ``(A) submit a report to the Securities and Exchange 
                Commission not later than 18 months after the date of 
                the first meeting of the Committee that--
                          ``(i) identifies the challenges and 
                        opportunities for investors associated with 
                        sustainable finance; and
                          ``(ii) recommends policy changes to 
                        facilitate the flow of capital towards 
                        sustainable investments, in particular 
                        environmentally sustainable investments;
                  ``(B) when solicited, advise the Commission on 
                sustainable finance; and
                  ``(C) communicate with individuals and entities with 
                an interest in sustainable finance.
          ``(3) Membership.--
                  ``(A) Members.--
                          ``(i) In general.--The Committee shall 
                        consist of no more than 20 members who shall 
                        each serve for one four-year term.
                          ``(ii) Representation.--Each member shall 
                        represent individuals and entities with an 
                        interest in sustainable finance, such as--
                                  ``(I) experts on sustainable finance;
                                  ``(II) operators of financial 
                                infrastructure;
                                  ``(III) entities that provide 
                                analysis, data, or methodologies that 
                                facilitate sustainable finance;
                                  ``(IV) insurance companies, pension 
                                funds, asset managers, depository 
                                institutions, or credit unions; or
                                  ``(V) other financial institutions 
                                that intermediate investments in 
                                sustainable finance or manage risks 
                                related to sustainable development.
                          ``(iii) Representation of interests.--A 
                        member may not represent a single individual or 
                        entity and shall represent types of individuals 
                        and entities with similar interests in 
                        sustainable finance.
                  ``(B) Selection.--
                          ``(i) In general.--The Commission shall--
                                  ``(I) publish criteria for selection 
                                of members on the website of the 
                                Commission and in the Federal Register; 
                                and
                                  ``(II) solicit applications for 
                                membership on the website of the 
                                Commission and in the Federal Register.
                          ``(ii) Equal share.--From the individuals who 
                        submit applications for membership, each 
                        Commissioner of the Commission shall select an 
                        equal number of the members of the Committee.
                  ``(C) Pay.--Members may not receive pay by reason of 
                their service on the Committee but may receive travel 
                or transportation expenses in accordance with 
                applicable provisions under subchapter I of chapter 57 
                of title 5, United States Code.
                  ``(D) Member transparency.--The name of each member 
                and the types of individuals and entities that such 
                member represents shall be published on the website of 
                the Commission.
                  ``(E) Staff.--The Committee shall be supported by 
                staff from the Office of the Investor Advocate of the 
                Commission that are dedicated to environmental, social 
                and governance (in this subsection referred to as 
                `ESG') issues.
                  ``(F) Authorization of appropriation.--There are 
                authorized to be appropriated such sums as are 
                necessary to finance costs associated with staff 
                dedicated to ESG issues in the Office of the Investor 
                Advocate of the Commission.
          ``(4) Sustainable finance.--For the purposes of this 
        subsection, the term `sustainable finance' means the provision 
        of finance with respect to investments taking into account 
        environmental, social, and governance considerations.
          ``(5) SEC response.--The Commission shall, not later than 6 
        months after the date on which the Committee submits a report 
        to the Commission pursuant to paragraph (2)(A), publish a 
        response to such report.''.

                          Purpose and Summary

    On September 13, 2009, Representative Juan Vargas 
introduced H.R. 4329, the ESG Disclosure Simplification Act of 
2019. H.R. 4329 requires the Securities and Exchange Commission 
(SEC) to issue rules requiring public companies to disclose 
certain environmental, social, and governance (ESG) metrics. 
The bill authorizes the SEC to delay the phase-in of these 
rules for small companies. The bill also requires public 
companies to disclose annually in their proxy statements a 
description of their views on the link between ESG metrics and 
long-term business performance, as well as the process the 
companies use to determine such impacts. Finally, this bill 
creates a Sustainable Finance Advisory Committee within the 
SEC, which would: make recommendations to the SEC on which ESG 
metrics public companies should be required to disclose; submit 
a report to the SEC that identifies challenges and 
opportunities for investors in sustainable finance and 
recommends policy changes that would facilitate the flow of 
capital toward sustainable investments; advise the SEC on 
sustainable finance; and communicate with individuals and 
entities with an interest in sustainable finance.

                  Background and Need for Legislation

    Environmental, social, and governance (ESG) matters 
generally include issues relating to environmental 
sustainability, such as climate change; social issues such as 
human rights and labor practices; and governance issues such as 
gender, racial, and ethnic diversity at both the executive and 
board levels.
    There is growing evidence that ESG disclosures are material 
to investors. In recent years, investors have increasingly been 
demanding more--and better--disclosure of ESG information from 
public companies.\1\ Many investors view ESG information as 
important not just for evaluating reputational risks, but for 
evaluating companies' financial performance as well.\2\ For 
example, Blackrock Investment Institute stated in a 2015 report 
that:
---------------------------------------------------------------------------
    \1\See e.g., Donnelly Financial, The Future of ESG and 
Sustainability Reporting: What Issuers Need to Know Right Now, at 3 
(November 14, 2018) (finding that 65% of institutional investors 
``often or always consider environmental and social issues in their 
investment decisions,'' and 95% ``often or always consider governance 
issues--for all investments.'').
    \2\See e.g., Bank of America, ESG: Good Companies Can Make Good 
Stocks, at 1 (December 18, 2016) (finding that ``[ESG] metrics have 
been strong indicators of future volatility, earnings risk, price 
declines and bankruptcies.''); Nordea, Cracking the ESG Code, at 1 
(September 5, 2017) (``Companies that score higher on ESG demonstrate 
better operational performance, with regards to both the level and the 
stability of returns.'').

          ESG factors cannot be divorced from financial 
        analysis. We view a strong ESG record as a mark of 
        operational and management excellence. Companies that 
        score high on ESG measures tend to quickly adapt to 
        changing environmental and social trends, use resources 
        efficiently, have engaged (and, therefore, productive) 
        employees, and face lower risks of regulatory fines or 
        reputational damage.\3\
---------------------------------------------------------------------------
    \3\Blackrock Investment Institute, The Price of Climate Change: 
Global Warming's Impact on Portfolios, at 7 (October 31, 2015).

    Moreover, credit rating agencies now incorporate EGS 
factors into their ratings methodologies--in fact, S&P has 
taken over 100 rating actions based on environmental and 
climate concerns.\4\
---------------------------------------------------------------------------
    \4\Standard & Poor's, How Does S&P Global Ratings Incorporate 
Environmental, Social, and Governance Risks Into Its Ratings Analysis, 
at 2 (November 21, 2017) (noting that between July 16, 2015 and August 
29, 2017, ``environmental and climate (E&C) concerns affected corporate 
ratings in 717 cases, or approximately 10% of corporate ratings 
assessments and resulted in a rating impact (an upgrade, downgrade, 
outlook revision, or CreditWatch placement) in 106 cases.'').
---------------------------------------------------------------------------
    In recognition of the growing importance of ESG disclosures 
in the investment landscape, the International Organization of 
Securities Commissions (IOSCO) published a statement on January 
18, 2019 emphasizing ``the importance for issuers of 
considering the inclusion of environmental, social and 
governance (ESG) matters when disclosing information material 
to investors' decisions.''\5\ However, while the SEC is a 
member of IOSCO, it was the only member regulator not to sign 
on to the IOSCO statement on ESG disclosures.\6\
---------------------------------------------------------------------------
    \5\IOSCO, Statement on Disclosure of ESG Matters by Issuers, at 1 
(January 18, 2019), available at https://www.iosco.org/library/pubdocs/
pdf/IOSCOPD619.pdf.
    \6\See id. at 1, n. 1.
---------------------------------------------------------------------------
    In October 2018, a coalition of large public pension funds, 
asset managers, law professors, and non-profit organizations 
filed a petition with the SEC for a rulemaking on ESG 
disclosures.\7\ The petition called on the SEC to develop a 
comprehensive ESG disclosure framework, and identified seven 
specific issues that the SEC could act on immediately: (1) 
climate risk; (2) annual ESG disclosures based on the Global 
Reporting Initiative (GRI) framework; (3) gender pay ratios; 
(4) human capital management; (5) human rights; (6) political 
spending; and (7) tax disclosure.\8\
---------------------------------------------------------------------------
    \7\Cynthia A. Williams, Jill E. Fisch, et al., Request for 
Rulemaking on Environmental, Social, and Governance (ESG) Disclosure, 
File No. 4-730 (October 1, 2018), available at https://www.sec.gov/
rules/petitions/2018/petn4-730.pdf.
    \8\See id. at 13-16.
---------------------------------------------------------------------------
    In addition, over 2,300 investment managers, asset 
managers, and service providers representing over $80 trillion 
in assets under management (AUM) are signatories to the UN-
sponsored Principles for Responsible Investment (PRI), which 
commit these institutions to incorporating ESG factors into 
their investment decisions.\9\ Of these signatories, 458 are 
U.S. institutions, which collectively represent over $40 
trillion AUM.
---------------------------------------------------------------------------
    \9\PRI is a non-profit organization, originally formed by the 
United Nations in 2006, that brings together the world's investment 
community in order to promote responsible investment and encourages 
investors to use responsible investment. See About the PRI, available 
at https://www.unpri.org/pri/about-the-pri.
---------------------------------------------------------------------------
    In testifying before the Subcommittee on Investor 
Protection, Entrepreneurship, and Capital Markets, Tim Mohin, 
Chief Executive of the Global Reporting Initiative (GRI) noted 
that ``focusing strictly on short-term financial impacts will 
result in the exclusion of key issues such as human rights and 
greenhouse gas emissions from corporate disclosures. These 
exclusions would leave companies and investors exposed to risks 
which, over the long-term, can have significant financial 
implications.'' A representative for the California Public 
Employees Retirement System (CalPERS) also testified that the 
disclosures required in H.R. 4329 ``are important to better 
understand companies' potential long-term performance and 
risks'' and that ``enhanced corporate reporting related to 
governance, risk, and compliance helps to put historical 
performance, as well as risks, opportunities, and prospects for 
the company into context'' and that this information ``will 
help investors understand a company's strategic objectives and 
its progress in meeting them.''
    H.R. 4329 is supported by, among others, the Teachers 
Insurance and Annuity Association of America-College Retirement 
Equities Fund (TIAA-CREF), Decatur Capital Management, 
Principles for Responsible Investment (PRI), and the California 
Public Employees Retirement System (CalPERS).

                      Section-by-Section Analysis


Section 1. Short title

    This section states that the title of the bill is the ``ESG 
Disclosure Simplification Act of 2019.''

Section 2. ESG disclosures

    Subsection (a) amends section 14 of the Securities Exchange 
Act of 1934 (15 U.S.C. 78n) by adding a new subsection (k). The 
new subsection (k) requires issuers that have registered 
securities or that file annual reports to disclose in any proxy 
or consent solicitation material for an annual shareholder 
meeting: a clear description of the link between environmental, 
social, and governance (ESG) metrics and the issuer's long-term 
business strategy; and any process the issuer uses to determine 
the impact of these ESG metrics on its long-term business 
strategy.
    Paragraph (1) of subsection (b) requires the Securities and 
Exchange Commission to promulgate rules to define and require 
the disclosure of ESG metrics.
    Paragraph (2) requires that the Sustainable Finance 
Advisory Committee created by the amendments contained in 
Section 3 of this Act to submit to the SEC recommendations 
regarding what ESG metrics the SEC should require issuers to 
disclose within 180 days of its first meeting.
    Paragraph (3) states that ESG metrics defined by the SEC 
are de facto material for disclosure purposes.
    Paragraph (4) allows the SEC to incorporate any 
internationally recognized, independent, multi-stakeholder 
environmental, social, and governance disclosure standards.
    Paragraph (5) allows the SEC to incorporate any 
internationally recognized, independent, multi-stakeholder 
environmental, social, and governance disclosure standards.
    Paragraph (6) allows the SEC to use a phased approach for 
small issuers and to determine the criteria used to determine 
when an issuer qualifies as a small issuer.

Section 3. Sustainable Finance Advisory Commission

    This section amends section 4 of the Securities and 
Exchange Act of 1934 (15 U.S.C. 78d) by adding a new subsection 
(k). The new subsection (k) establishes a permanent advisory 
committee to be called the Sustainable Finance Advisory 
Committee and sets forth the duties and membership of the 
Committee.
    Within 18 months after the Committee's first meeting, the 
Committee shall issue a report that identifies challenges and 
opportunities for investors associated with sustainable finance 
and recommends policy changes that facilitate the flow of 
capital towards sustainable investments, particularly 
environmentally sustainable investments. This Sustainable 
Advisory Committee shall also advise the SEC on sustainable 
finance and communicate with interested individuals and 
entities.
    The Committee will consist of no more than 20 members, who 
shall each serve for one four-year term. Without representing 
single individuals or entities, each member will represent 
types of individuals and entities with similar interests in 
sustainable finance, such as: experts on sustainable finance; 
operators of financial infrastructure; entities that provide 
analysis, data, or methodologies that facilitate sustainable 
finance; insurance companies, pension funds, asset managers, 
depository institutions, credit unions, or other financial 
institutions.
    The SEC shall publish the criteria utilized for selection 
of members and shall solicit applications on the SEC's website 
and in the Federal Register. Each SEC Commissioner shall select 
an equal number of members of the Committee.
    Members of the Committee may not receive pay for their 
position on the Committee but may receive travel or 
transportation expenses.
    The name of each member and the types of individuals and 
entities the Member represents shall be published on the SEC's 
website.
    The SEC's Office of the Investor Advocate staff will 
support the Committee. Funds necessary to finance costs 
associated with these staff are authorized to be appropriated.
    The term `sustainable finance' is defined as the provision 
of finance with respect to investments taking into account 
environmental, social, and governance considerations.
    The SEC shall publish a response to the Committee report 
within 6 months of the report's submission to the Commission.

                                Hearings

    For the purposes of section 103(i) of H. Res. 6 for the 
116th Congress, the Subcommittee on Investor Protection, 
Entrepreneurship, and Capital Markets of the Committee on 
Financial Services held a hearing on July 10, 2019, entitled: 
``Building a Sustainable and Competitive Economy: An 
Examination of Proposals to Improve Environmental, Social, and 
Governance Disclosures,'' to consider the ESG Disclosure 
Simplification Act. Testifying at the hearing were Tim Mohin, 
Chief Executive, Global Reporting Initiative (GRI), James 
Andrus, Investment Manager-Financial Markets, Sustainable 
Investment, CalPERS Investment Office, the Honorable Paul S. 
Atkins, Chief Executive Officer, Patomak Global Partners, Degas 
A. Wright, CFA, Chief Executive Officer, Decatur Capital 
Management, Inc., and Mindy S. Lubber, President and Chief 
Executive Officer, Ceres.

                        Committee Consideration

    The Committee on Financial Services met in open session on, 
and ordered H.R. 4329 to be reported favorably to the House 
with an amendment in the nature of a substitute by a vote of 31 
yeas and 22 nays, a quorum being present.

                  Committee Votes and Roll Call Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
following roll call votes occurred during the Committee's 
consideration of H.R. 4329.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the descriptive portions of this report.

             Statement of Performance Goals and Objectives

    Pursuant to clause (3)(c) of rule XIII of the Rules of the 
House of Representatives, the goals of H.R. 4329 are to ensure 
that the Securities Exchange Act requires ESG disclosures.

               New budget Authority and CBO Cost Estimate

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives and section 308(a) of the 
Congressional Budget Act of 1974, and pursuant to clause 
3(c)(3) of rule XIII of the Rules of the House of 
Representatives and section 402 of the Congressional Budget Act 
of 1974, the Committee has received the following estimate for 
H.R. 4329 from the Director of the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, November 20, 2019.
Hon. Maxine Waters,
Chairwoman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Madam Chairwoman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4329, the ESG 
Disclosure Simplification Act of 2019.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is David Hughes.
            Sincerely,
                                         Phillip L. Swagel,
                                                          Director.
    Enclosure.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    H.R. 4329 would require the Securities and Exchange 
Commission (SEC) to issue rules that define environmental, 
social, and governance (ESG) metrics and require publicly 
traded companies to disclose their views about those metrics to 
their shareholders and the SEC annually. The SEC also would be 
required to establish a permanent advisory committee, composed 
of up to 20 members, to advise the agency on sustainable 
finance issues.
    Using information from the SEC, CBO estimates that 
implementing H.R. 4329 would cost $6 million over the 2020-2024 
period for the SEC to issue rules and support the advisory 
committee. However, because the SEC is authorized to collect 
fees each year to offset its annual appropriation, CBO expects 
that any net change in discretionary spending over the 2020-
2024 period would be negligible, assuming appropriation actions 
consistent with that authority.
    By requiring publicly traded companies to disclose ESG 
metrics to shareholders and the SEC, H.R. 4329 would impose a 
private-sector mandate as defined in the Unfunded Mandates 
Reform Act (UMRA). The mandate's costs would equal the expenses 
incurred by those companies to comply with the new disclosure 
requirement. Because the SEC has not issued the rules required 
by the bill, CBO cannot determine whether the cost would exceed 
the private-sector threshold established in UMRA ($164 million 
in 2019, adjusted annually for inflation).
    If the SEC increased fees to offset the costs associated 
with implementing the bill, H.R. 4329 would increase the cost 
of an existing mandate on private entities required to pay 
those fees. CBO estimates that the incremental cost of the 
mandate would be small.
    The bill contains no intergovernmental mandates as defined 
in UMRA.
    The CBO staff contacts for this estimate are David Hughes 
(for federal costs) and Rachel Austin (for mandates). The 
estimate was reviewed by H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.

                        Committee Cost Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.R. 4329. 
However, clause 3(d)(2)(B) of that rule provides that this 
requirement does not apply when the committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act.

                       Unfunded Mandate Statement

    Pursuant to Section 423 of the Congressional Budget and 
Impoundment Control Act (as amended by Section 101(a)(2) of the 
Unfunded Mandates Reform Act, Pub. L. 104-4), the Committee 
adopts as its own the estimate of federal mandates regarding 
H.R. 4329, as amended, prepared by the Director of the 
Congressional Budget Office.

                           Advisory Committee

    H.R. 4329 establishes a sustainable finance advisory 
committee, which operates consistent with section 5(b) of the 
Federal Advisory Committee Act.

              Application of Law to the Legislative Branch

    Pursuant to section 102(b)(3) of the Congressional 
Accountability Act, Pub. L. No. 104-1, H.R. 4329, as amended, 
does not apply to terms and conditions of employment or to 
access to public services or accommodations within the 
legislative branch.

                           Earmark Statement

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 4329 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as described in clauses 9(e), 9(f), and 9(g) of rule 
XXI.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of H.R. 4329 establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
federal program, a program that was included in any report from 
the Government Accountability Office to Congress pursuant to 
section 21 of Public Law 111-139, or a program related to a 
program identified in the most recent Catalog of Federal 
Domestic Assistance.

                        Changes to Existing Law

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, H.R. 4329, as reported, are shown as follows:

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

                    SECURITIES EXCHANGE ACT OF 1934


TITLE I--REGULATION OF SECURITIES EXCHANGES

           *       *       *       *       *       *       *



                   securities and exchange commission

  Sec. 4. (a) There is hereby established a Securities and 
Exchange Commission (hereinafter referred to as the 
``Commission'') to be composed of five commissioners to be 
appointed by the President by and with the advice and consent 
of the Senate. Not more than three of such commissioners shall 
be members of the same political party, and in making 
appointments members of different political parties shall be 
appointed alternately as nearly as may be practicable. No 
commissioner shall engage in any other business, vocation, or 
employment than that of serving as commissioner, nor shall any 
commissioner participate, directly or indirectly, in any stock-
market operations or transactions of a character subject to 
regulation by the Commission pursuant to this title. Each 
commissioner shall hold office for a term of five years and 
until his successor is appointed and has qualified, except that 
he shall not so continue to serve beyond the expiration of the 
next session of Congress subsequent to the expiration of said 
fixed term of office, and except (1) any commissioner appointed 
to fill a vacancy occurring prior to the expiration of the term 
for which his predecessor was appointed shall be appointed for 
the remainder of such term, and (2) the terms of office of the 
commissioners first taking office after the enactment of this 
title shall expire as designated by the President at the time 
of nomination, one at the end of one year, one at the end of 
two years, one at the end of three years, one at the end of 
four years, and one at the end of five years, after the date of 
the enactment of this title.
  (b) Appointment and Compensation of Staff and Leasing 
Authority.--
          (1) Appointment and compensation.--The Commission 
        shall appoint and compensate officers, attorneys, 
        economists, examiners, and other employees in 
        accordance with section 4802 of title 5, United States 
        Code.
          (2) Reporting of information.--In establishing and 
        adjusting schedules of compensation and benefits for 
        officers, attorneys, economists, examiners, and other 
        employees of the Commission under applicable provisions 
        of law, the Commission shall inform the heads of the 
        agencies referred to under section 1206 of the 
        Financial Institutions Reform, Recovery, and 
        Enforcement Act of 1989 (12 U.S.C. 1833b) and Congress 
        of such compensation and benefits and shall seek to 
        maintain comparability with such agencies regarding 
        compensation and benefits.
          (3) Leasing authority.--Nothwithstanding any other 
        provision of law, the Commission is authorized to enter 
        directly into leases for real property for office, 
        meeting, storage, and such other space as is necessary 
        to carry out its functions, and shall be exempt from 
        any General Services Administration space management 
        regulations or directives.
  (c) Notwithstanding any other provision of law, in accordance 
with regulations which the Commission shall prescribe to 
prevent conflicts of interest, the Commission may accept 
payment and reimbursement, in cash or in kind, from non-Federal 
agencies, organizations, and individuals for travel, 
subsistence, and other necessary expenses incurred by 
Commission members and employees in attending meetings and 
conferences concerning the functions or activities of the 
Commission. Any payment or reimbursement accepted shall be 
credited to the appropriated funds of the Commission. The 
amount of travel, subsistence, and other necessary expenses for 
members and employees paid or reimbursed under this subsection 
may exceed per diem amounts established in official travel 
regulations, but the Commission may include in its regulations 
under this subsection a limitation on such amounts.
  (d) Notwithstanding any other provision of law, former 
employers of participants in the Commission's professional 
fellows programs may pay such participants their actual 
expenses for relocation to Washington, District of Columbia, to 
facilitate their participation in such programs, and program 
participants may accept such payments.
  (e) Notwithstanding any other provision of law, whenever any 
fee is required to be paid to the Commission pursuant to any 
provision of the securities laws or any other law, the 
Commission may provide by rule that such fee shall be paid in a 
manner other than in cash and the Commission may also specify 
the time that such fee shall be determined and paid relative to 
the filing of any statement or document with the Commission.
  (f) Reimbursement of Expenses for Assisting Foreign 
Securities Authorities.--Notwithstanding any other provision of 
law, the Commission may accept payment and reimbursement, in 
cash or in kind, from a foreign securities authority, or made 
on behalf of such authority, for necessary expenses incurred by 
the Commission, its members, and employees in carrying out any 
investigation pursuant to section 21(a)(2) of this title or in 
providing any other assistance to a foreign securities 
authority. Any payment or reimbursement accepted shall be 
considered a reimbursement to the appropriated funds of the 
Commission.
  (g) Office of the Investor Advocate.--
          (1) Office established.--There is established within 
        the Commission the Office of the Investor Advocate (in 
        this subsection referred to as the ``Office'').
          (2) Investor advocate.--
                  (A) In general.--The head of the Office shall 
                be the Investor Advocate, who shall--
                          (i) report directly to the Chairman; 
                        and
                          (ii) be appointed by the Chairman, in 
                        consultation with the Commission, from 
                        among individuals having experience in 
                        advocating for the interests of 
                        investors in securities and investor 
                        protection issues, from the perspective 
                        of investors.
                  (B) Compensation.--The annual rate of pay for 
                the Investor Advocate shall be equal to the 
                highest rate of annual pay for other senior 
                executives who report to the Chairman of the 
                Commission.
                  (C) Limitation on service.--An individual who 
                serves as the Investor Advocate may not be 
                employed by the Commission--
                          (i) during the 2-year period ending 
                        on the date of appointment as Investor 
                        Advocate; or
                          (ii) during the 5-year period 
                        beginning on the date on which the 
                        person ceases to serve as the Investor 
                        Advocate.
          (3) Staff of office.--The Investor Advocate, after 
        consultation with the Chairman of the Commission, may 
        retain or employ independent counsel, research staff, 
        and service staff, as the Investor Advocate deems 
        necessary to carry out the functions, powers, and 
        duties of the Office.
          (4) Functions of the investor advocate.--The Investor 
        Advocate shall--
                  (A) assist retail investors in resolving 
                significant problems such investors may have 
                with the Commission or with self-regulatory 
                organizations;
                  (B) identify areas in which investors would 
                benefit from changes in the regulations of the 
                Commission or the rules of self-regulatory 
                organizations;
                  (C) identify problems that investors have 
                with financial service providers and investment 
                products;
                  (D) analyze the potential impact on investors 
                of--
                          (i) proposed regulations of the 
                        Commission; and
                          (ii) proposed rules of self-
                        regulatory organizations registered 
                        under this title; and
                  (E) to the extent practicable, propose to the 
                Commission changes in the regulations or orders 
                of the Commission and to Congress any 
                legislative, administrative, or personnel 
                changes that may be appropriate to mitigate 
                problems identified under this paragraph and to 
                promote the interests of investors.
          (5) Access to documents.--The Commission shall ensure 
        that the Investor Advocate has full access to the 
        documents of the Commission and any self-regulatory 
        organization, as necessary to carry out the functions 
        of the Office.
          (6) Annual reports.--
                  (A) Report on objectives.--
                          (i) In general.--Not later than June 
                        30 of each year after 2010, the 
                        Investor Advocate shall submit to the 
                        Committee on Banking, Housing, and 
                        Urban Affairs of the Senate and the 
                        Committee on Financial Services of the 
                        House of Representatives a report on 
                        the objectives of the Investor Advocate 
                        for the following fiscal year.
                          (ii) Contents.--Each report required 
                        under clause (i) shall contain full and 
                        substantive analysis and explanation.
                  (B) Report on activities.--
                          (i) In general.--Not later than 
                        December 31 of each year after 2010, 
                        the Investor Advocate shall submit to 
                        the Committee on Banking, Housing, and 
                        Urban Affairs of the Senate and the 
                        Committee on Financial Services of the 
                        House of Representatives a report on 
                        the activities of the Investor Advocate 
                        during the immediately preceding fiscal 
                        year.
                          (ii) Contents.--Each report required 
                        under clause (i) shall include--
                                  (I) appropriate statistical 
                                information and full and 
                                substantive analysis;
                                  (II) information on steps 
                                that the Investor Advocate has 
                                taken during the reporting 
                                period to improve investor 
                                services and the responsiveness 
                                of the Commission and self-
                                regulatory organizations to 
                                investor concerns;
                                  (III) a summary of the most 
                                serious problems encountered by 
                                investors during the reporting 
                                period;
                                  (IV) an inventory of the 
                                items described in subclause 
                                (III) that includes--
                                          (aa) identification 
                                        of any action taken by 
                                        the Commission or the 
                                        self-regulatory 
                                        organization and the 
                                        result of such action;
                                          (bb) the length of 
                                        time that each item has 
                                        remained on such 
                                        inventory; and
                                          (cc) for items on 
                                        which no action has 
                                        been taken, the reasons 
                                        for inaction, and an 
                                        identification of any 
                                        official who is 
                                        responsible for such 
                                        action;
                                  (V) recommendations for such 
                                administrative and legislative 
                                actions as may be appropriate 
                                to resolve problems encountered 
                                by investors; and
                                  (VI) any other information, 
                                as determined appropriate by 
                                the Investor Advocate.
                          (iii) Independence.--Each report 
                        required under this paragraph shall be 
                        provided directly to the Committees 
                        listed in clause (i) without any prior 
                        review or comment from the Commission, 
                        any commissioner, any other officer or 
                        employee of the Commission, or the 
                        Office of Management and Budget.
                          (iv) Confidentiality.--No report 
                        required under clause (i) may contain 
                        confidential information.
          (7) Regulations.--The Commission shall, by 
        regulation, establish procedures requiring a formal 
        response to all recommendations submitted to the 
        Commission by the Investor Advocate, not later than 3 
        months after the date of such submission.
          (8) Ombudsman.--
                  (A) Appointment.--Not later than 180 days 
                after the date on which the first Investor 
                Advocate is appointed under paragraph 
                (2)(A)(i), the Investor Advocate shall appoint 
                an Ombudsman, who shall report directly to the 
                Investor Advocate.
                  (B) Duties.--The Ombudsman appointed under 
                subparagraph (A) shall--
                          (i) act as a liaison between the 
                        Commission and any retail investor in 
                        resolving problems that retail 
                        investors may have with the Commission 
                        or with self-regulatory organizations;
                          (ii) review and make recommendations 
                        regarding policies and procedures to 
                        encourage persons to present questions 
                        to the Investor Advocate regarding 
                        compliance with the securities laws; 
                        and
                          (iii) establish safeguards to 
                        maintain the confidentiality of 
                        communications between the persons 
                        described in clause (ii) and the 
                        Ombudsman.
                  (C) Limitation.--In carrying out the duties 
                of the Ombudsman under subparagraph (B), the 
                Ombudsman shall utilize personnel of the 
                Commission to the extent practicable. Nothing 
                in this paragraph shall be construed as 
                replacing, altering, or diminishing the 
                activities of any ombudsman or similar office 
                of any other agency.
                  (D) Report.--The Ombudsman shall submit a 
                semiannual report to the Investor Advocate that 
                describes the activities and evaluates the 
                effectiveness of the Ombudsman during the 
                preceding year. The Investor Advocate shall 
                include the reports required under this section 
                in the reports required to be submitted by the 
                Inspector Advocate under paragraph (6).
  (h) Examiners.--
          (1) Division of trading and markets.--The Division of 
        Trading and Markets of the Commission, or any successor 
        organizational unit, shall have a staff of examiners 
        who shall--
                  (A) perform compliance inspections and 
                examinations of entities under the jurisdiction 
                of that Division; and
                  (B) report to the Director of that Division.
          (2) Division of investment management.--The Division 
        of Investment Management of the Commission, or any 
        successor organizational unit, shall have a staff of 
        examiners who shall--
                  (A) perform compliance inspections and 
                examinations of entities under the jurisdiction 
                of that Division; and
                  (B) report to the Director of that Division.
  (i) Securities and Exchange Commission Reserve Fund.--
          (1) Reserve fund established.--There is established 
        in the Treasury of the United States a separate fund, 
        to be known as the ``Securities and Exchange Commission 
        Reserve Fund'' (referred to in this subsection as the 
        ``Reserve Fund'').
          (2) Reserve fund amounts.--
                  (A) In general.--Except as provided in 
                subparagraph (B), any registration fees 
                collected by the Commission under section 6(b) 
                of the Securities Act of 1933 (15 U.S.C. 
                77f(b)) or section 24(f) of the Investment 
                Company Act of 1940 (15 U.S.C. 80a-24(f)) shall 
                be deposited into the Reserve Fund.
                  (B) Limitations.--For any 1 fiscal year--
                          (i) the amount deposited in the Fund 
                        may not exceed $50,000,000; and
                          (ii) the balance in the Fund may not 
                        exceed $100,000,000.
                  (C) Excess fees.--Any amounts in excess of 
                the limitations described in subparagraph (B) 
                that the Commission collects from registration 
                fees under section 6(b) of the Securities Act 
                of 1933 (15 U.S.C. 77f(b)) or section 24(f) of 
                the Investment Company Act of 1940 (15 U.S.C. 
                80a-24(f)) shall be deposited in the General 
                Fund of the Treasury of the United States and 
                shall not be available for obligation by the 
                Commission.
          (3) Use of amounts in reserve fund.--The Commission 
        may obligate amounts in the Reserve Fund, not to exceed 
        a total of $100,000,000 in any 1 fiscal year, as the 
        Commission determines is necessary to carry out the 
        functions of the Commission. Any amounts in the reserve 
        fund shall remain available until expended. Not later 
        than 10 days after the date on which the Commission 
        obligates amounts under this paragraph, the Commission 
        shall notify Congress of the date, amount, and purpose 
        of the obligation.
          (4) Rule of construction.--Amounts collected and 
        deposited in the Reserve Fund shall not be construed to 
        be Government funds or appropriated monies and shall 
        not be subject to apportionment for the purpose of 
        chapter 15 of title 31, United States Code, or under 
        any other authority.
  (j) Office of the Advocate for Small Business Capital 
Formation.--
          (1) Office established.--There is established within 
        the Commission the Office of the Advocate for Small 
        Business Capital Formation (hereafter in this 
        subsection referred to as the ``Office'').
          (2) Advocate for small business capital formation.--
                  (A) In general.--The head of the Office shall 
                be the Advocate for Small Business Capital 
                Formation, who shall--
                          (i) report directly to the 
                        Commission; and
                          (ii) be appointed by the Commission, 
                        from among individuals having 
                        experience in advocating for the 
                        interests of small businesses and 
                        encouraging small business capital 
                        formation.
                  (B) Compensation.--The annual rate of pay for 
                the Advocate for Small Business Capital 
                Formation shall be equal to the highest rate of 
                annual pay for other senior executives who 
                report directly to the Commission.
                  (C) No current employee of the commission.--
                An individual may not be appointed as the 
                Advocate for Small Business Capital Formation 
                if the individual is currently employed by the 
                Commission.
          (3) Staff of office.--The Advocate for Small Business 
        Capital Formation, after consultation with the 
        Commission, may retain or employ independent counsel, 
        research staff, and service staff, as the Advocate for 
        Small Business Capital Formation determines to be 
        necessary to carry out the functions of the Office.
          (4) Functions of the advocate for small business 
        capital formation.--The Advocate for Small Business 
        Capital Formation shall--
                  (A) assist small businesses and small 
                business investors in resolving significant 
                problems such businesses and investors may have 
                with the Commission or with self-regulatory 
                organizations;
                  (B) identify areas in which small businesses 
                and small business investors would benefit from 
                changes in the regulations of the Commission or 
                the rules of self-regulatory organizations;
                  (C) identify problems that small businesses 
                have with securing access to capital, including 
                any unique challenges to minority-owned small 
                businesses, women-owned small businesses, and 
                small businesses affected by hurricanes or 
                other natural disasters;
                  (D) analyze the potential impact on small 
                businesses and small business investors of--
                          (i) proposed regulations of the 
                        Commission that are likely to have a 
                        significant economic impact on small 
                        businesses and small business capital 
                        formation; and
                          (ii) proposed rules that are likely 
                        to have a significant economic impact 
                        on small businesses and small business 
                        capital formation of self-regulatory 
                        organizations registered under this 
                        title;
                  (E) conduct outreach to small businesses and 
                small business investors, including through 
                regional roundtables, in order to solicit views 
                on relevant capital formation issues;
                  (F) to the extent practicable, propose to the 
                Commission changes in the regulations or orders 
                of the Commission and to Congress any 
                legislative, administrative, or personnel 
                changes that may be appropriate to mitigate 
                problems identified under this paragraph and to 
                promote the interests of small businesses and 
                small business investors;
                  (G) consult with the Investor Advocate on 
                proposed recommendations made under 
                subparagraph (F); and
                  (H) advise the Investor Advocate on issues 
                related to small businesses and small business 
                investors.
          (5) Access to documents.--The Commission shall ensure 
        that the Advocate for Small Business Capital Formation 
        has full access to the documents and information of the 
        Commission and any self-regulatory organization, as 
        necessary to carry out the functions of the Office.
          (6) Annual report on activities.--
                  (A) In general.--Not later than December 31 
                of each year after 2015, the Advocate for Small 
                Business Capital Formation shall submit to the 
                Committee on Banking, Housing, and Urban 
                Affairs of the Senate and the Committee on 
                Financial Services of the House of 
                Representatives a report on the activities of 
                the Advocate for Small Business Capital 
                Formation during the immediately preceding 
                fiscal year.
                  (B) Contents.--Each report required under 
                subparagraph (A) shall include--
                          (i) appropriate statistical 
                        information and full and substantive 
                        analysis;
                          (ii) information on steps that the 
                        Advocate for Small Business Capital 
                        Formation has taken during the 
                        reporting period to improve small 
                        business services and the 
                        responsiveness of the Commission and 
                        self-regulatory organizations to small 
                        business and small business investor 
                        concerns;
                          (iii) a summary of the most serious 
                        issues encountered by small businesses 
                        and small business investors, including 
                        any unique issues encountered by 
                        minority-owned small businesses, women-
                        owned small businesses, and small 
                        businesses affected by hurricanes or 
                        other natural disasters and their 
                        investors, during the reporting period;
                          (iv) an inventory of the items 
                        summarized under clause (iii) 
                        (including items summarized under such 
                        clause for any prior reporting period 
                        on which no action has been taken or 
                        that have not been resolved to the 
                        satisfaction of the Advocate for Small 
                        Business Capital Formation as of the 
                        beginning of the reporting period 
                        covered by the report) that includes--
                                  (I) identification of any 
                                action taken by the Commission 
                                or the self-regulatory 
                                organization and the result of 
                                such action;
                                  (II) the length of time that 
                                each item has remained on such 
                                inventory; and
                                  (III) for items on which no 
                                action has been taken, the 
                                reasons for inaction, and an 
                                identification of any official 
                                who is responsible for such 
                                action;
                          (v) recommendations for such changes 
                        to the regulations, guidance and orders 
                        of the Commission and such legislative 
                        actions as may be appropriate to 
                        resolve problems with the Commission 
                        and self-regulatory organizations 
                        encountered by small businesses and 
                        small business investors and to 
                        encourage small business capital 
                        formation; and
                          (vi) any other information, as 
                        determined appropriate by the Advocate 
                        for Small Business Capital Formation.
                  (C) Confidentiality.--No report required by 
                subparagraph (A) may contain confidential 
                information.
                  (D) Independence.--Each report required under 
                subparagraph (A) shall be provided directly to 
                the committees of Congress listed in such 
                subparagraph without any prior review or 
                comment from the Commission, any commissioner, 
                any other officer or employee of the 
                Commission, or the Office of Management and 
                Budget.
          (7) Regulations.--The Commission shall establish 
        procedures requiring a formal response to all 
        recommendations submitted to the Commission by the 
        Advocate for Small Business Capital Formation, not 
        later than 3 months after the date of such submission.
          (8) Government-business forum on small business 
        capital formation.--The Advocate for Small Business 
        Capital Formation shall be responsible for planning, 
        organizing, and executing the annual Government-
        Business Forum on Small Business Capital Formation 
        described in section 503 of the Small Business 
        Investment Incentive Act of 1980 (15 U.S.C. 80c-1).
          (9) Rule of construction.--Nothing in this subsection 
        may be construed as replacing or reducing the 
        responsibilities of the Investor Advocate with respect 
        to small business investors.
  (k) Sustainable Finance Advisory Committee.--
          (1) Establishment.--The Securities and Exchange 
        Commission (in this subsection referred to as the 
        ``Commission'') shall establish a permanent advisory 
        committee to be called the ``Sustainable Finance 
        Advisory Committee'' (in this subsection referred to as 
        the ``Committee'').
          (2) Duties of committee.--The Committee shall--
                  (A) submit a report to the Securities and 
                Exchange Commission not later than 18 months 
                after the date of the first meeting of the 
                Committee that--
                          (i) identifies the challenges and 
                        opportunities for investors associated 
                        with sustainable finance; and
                          (ii) recommends policy changes to 
                        facilitate the flow of capital towards 
                        sustainable investments, in particular 
                        environmentally sustainable 
                        investments;
                  (B) when solicited, advise the Commission on 
                sustainable finance; and
                  (C) communicate with individuals and entities 
                with an interest in sustainable finance.
          (3) Membership.--
                  (A) Members.--
                          (i) In general.--The Committee shall 
                        consist of no more than 20 members who 
                        shall each serve for one four-year 
                        term.
                          (ii) Representation.--Each member 
                        shall represent individuals and 
                        entities with an interest in 
                        sustainable finance, such as--
                                  (I) experts on sustainable 
                                finance;
                                  (II) operators of financial 
                                infrastructure;
                                  (III) entities that provide 
                                analysis, data, or 
                                methodologies that facilitate 
                                sustainable finance;
                                  (IV) insurance companies, 
                                pension funds, asset managers, 
                                depository institutions, or 
                                credit unions; or
                                  (V) other financial 
                                institutions that intermediate 
                                investments in sustainable 
                                finance or manage risks related 
                                to sustainable development.
                          (iii) Representation of interests.--A 
                        member may not represent a single 
                        individual or entity and shall 
                        represent types of individuals and 
                        entities with similar interests in 
                        sustainable finance.
                  (B) Selection.--
                          (i) In general.--The Commission 
                        shall--
                                  (I) publish criteria for 
                                selection of members on the 
                                website of the Commission and 
                                in the Federal Register; and
                                  (II) solicit applications for 
                                membership on the website of 
                                the Commission and in the 
                                Federal Register.
                          (ii) Equal share.--From the 
                        individuals who submit applications for 
                        membership, each Commissioner of the 
                        Commission shall select an equal number 
                        of the members of the Committee.
                  (C) Pay.--Members may not receive pay by 
                reason of their service on the Committee but 
                may receive travel or transportation expenses 
                in accordance with applicable provisions under 
                subchapter I of chapter 57 of title 5, United 
                States Code.
                  (D) Member transparency.--The name of each 
                member and the types of individuals and 
                entities that such member represents shall be 
                published on the website of the Commission.
                  (E) Staff.--The Committee shall be supported 
                by staff from the Office of the Investor 
                Advocate of the Commission that are dedicated 
                to environmental, social and governance (in 
                this subsection referred to as ``ESG'') issues.
                  (F) Authorization of appropriation.--There 
                are authorized to be appropriated such sums as 
                are necessary to finance costs associated with 
                staff dedicated to ESG issues in the Office of 
                the Investor Advocate of the Commission.
          (4) Sustainable finance.--For the purposes of this 
        subsection, the term ``sustainable finance'' means the 
        provision of finance with respect to investments taking 
        into account environmental, social, and governance 
        considerations.
          (5) SEC response.--The Commission shall, not later 
        than 6 months after the date on which the Committee 
        submits a report to the Commission pursuant to 
        paragraph (2)(A), publish a response to such report.

           *       *       *       *       *       *       *


                                proxies

  Sec. 14. (a)(1) It shall be unlawful for any person, by the 
use of the mails or by any means or instrumentality of 
interstate commerce or of any facility of a national securities 
exchange or otherwise, in contravention of such rules and 
regulations as the Commission may prescribe as necessary or 
appropriate in the public interest or for the protection of 
investors, to solicit or to permit the use of his name to 
solicit any proxy or consent or authorization in respect of any 
security (other than an exempted security) registered pursuant 
to section 12 of this title.
  (2) The rules and regulations prescribed by the Commission 
under paragraph (1) may include--
          (A) a requirement that a solicitation of proxy, 
        consent, or authorization by (or on behalf of) an 
        issuer include a nominee submitted by a shareholder to 
        serve on the board of directors of the issuer; and
          (B) a requirement that an issuer follow a certain 
        procedure in relation to a solicitation described in 
        subparagraph (A).
  (b)(1) It shall be unlawful for any member of a national 
securities exchange, or any broker or dealer registered under 
this title, or any bank, association, or other entity that 
exercises fiduciary powers, in contravention of such rules and 
regulations as the Commission may prescribe as necessary or 
appropriate in the public interest or for the protection of 
investors, to give, or to refrain from giving a proxy, consent, 
authorization, or information statement in respect of any 
security registered pursuant to section 12 of this title, or 
any security issued by an investment company registered under 
the Investment Company Act of 1940, and carried for the account 
of a customer.
  (2) With respect to banks, the rules and regulations 
prescribed by the Commission under paragraph (1) shall not 
require the disclosure of the names of beneficial owners of 
securities in an account held by the bank on the date of 
enactment of this paragraph unless the beneficial owner 
consents to the disclosure. The provisions of this paragraph 
shall not apply in the case of a bank which the Commission 
finds has not made a good faith effort to obtain such consent 
from such beneficial owners.
  (c) Unless proxies, consents, or authorizations in respect of 
a security registered pursuant to section 12 of this title, or 
a security issued by an investment company registered under the 
Investment Company Act of 1940, are solicited by or on behalf 
of the management of the issuer from the holders of record of 
such security in accordance with the rules and regulations 
prescribed under subsection (a) of this section, prior to any 
annual or other meeting of the holders of such security, such 
issuer shall, in accordance with rules and regulations 
prescribed by the Commission, file with the Commission and 
transmit to all holders of record of such security information 
substantially equivalent to the information which would be 
required to be transmitted if a solicitation were made, but no 
information shall be required to be filed or transmitted 
pursuant to this subsection before July 1, 1964.
  (d)(1) It shall be unlawful for any person, directly or 
indirectly, by use of the mails or by any means or 
instrumentality of interstate commerce or of any facility of a 
national securities exchange or otherwise, to make a tender 
offer for, or a request or invitation for tenders of, any class 
of any equity security which is registered pursuant to section 
12 of this title, or any equity security of an insurance 
company which would have been required to be so registered 
except for the exemption contained in section 12(g)(2)(G) of 
this title, or any equity security issued by a closed-end 
investment company registered under the Investment Company Act 
of 1940, if, after consummation thereof, such person would, 
directly or indirectly, be the beneficial owner of more than 5 
per centum of such class, unless at the time copies of the 
offer or request or invitation are first published or sent or 
given to security holders such person has filed with the 
Commission a statement containing such of the information 
specified in section 13(d) of this title, and such additional 
information as the Commission may by rules and regulations 
prescribe as necessary or appropriate in the public interest or 
for the protection of investors. All requests or invitations 
for tenders or advertisements making a tender offer or 
requesting or inviting tenders, of such a security shall be 
filed as a part of such statement and shall contain such of the 
information contained in such statement as the Commission may 
by rules and regulations prescribe. Copies of any additional 
material soliciting or requesting such tender offers subsequent 
to the initial solicitation or request shall contain such 
information as the Commission may by rules and regulations 
prescribe as necessary or appropriate in the public interest or 
for the protection of investors, and shall be filed with the 
Commission not later than the time copies of such material are 
first published or sent or given to security holders. Copies of 
all statements, in the form in which such material is furnished 
to security holders and the Commission, shall be sent to the 
issuer not later than the date such material is first published 
or sent or given to any security holders.
  (2) When two or more persons act as a partnership, limited 
partnership, syndicate, or other group for the purpose of 
acquiring, holding, or disposing of securities of an issuer, 
such syndicate or group shall be deemed a ``person'' for 
purposes of this subsection.
  (3) In determining, for purposes of this subsection, any 
percentage of a class of any security, such class shall be 
deemed to consist of the amount of the outstanding securities 
of such class, exclusive of any securities of such class held 
by or for the account of the issuer or a subsidiary of the 
issuer.
  (4) Any solicitation or recommendation to the holders of such 
a security to accept or reject a tender offer or request or 
invitation for tenders shall be made in accordance with such 
rules and regulations as the Commission may prescribe as 
necessary or appropriate in the public interest or for the 
protection of investors.
  (5) Securities deposited pursuant to a tender offer or 
request or invitation for tenders may be withdrawn by or on 
behalf of the depositor at any time until the expiration of 
seven days after the time definitive copies of the offer or 
request or invitation are first published or sent or given to 
security holders, and at any time after sixty days from the 
date of the original tender offer or request or invitation, 
except as the Commission may otherwise prescribe by rules, 
regulations, or order as necessary or appropriate in the public 
interest or for the protection of investors.
  (6) Where any person makes a tender offer, or request or 
invitation for tenders, for less than all the outstanding 
equity securities of a class, and where a greater number of 
securities is deposited pursuant thereto within ten days after 
copies of the offer or request or invitation are first 
published or sent or given to security holders than such person 
is bound or willing to take up and pay for, the securities 
taken up shall be taken up as nearly as may be pro rata, 
disregarding fractions, according to the number of securities 
deposited by each depositor. The provisions of this subsection 
shall also apply to securities deposited within ten days after 
notice of an increase in the consideration offered to security 
holders, as described in paragraph (7), is first published or 
sent or given to security holders.
  (7) Where any person varies the terms of a tender offer or 
request or invitation for tenders before the expiration thereof 
by increasing the consideration offered to holders of such 
securities, such person shall pay the increased consideration 
to each security holder whose securities are taken up and paid 
for pursuant to the tender offer or request or invitation for 
tenders whether or not such securities have been taken up by 
such person before the variation of the tender offer or request 
or invitation.
  (8) The provisions of this subsection shall not apply to any 
offer for, or request or invitation for tenders of, any 
security--
          (A) if the acquisition of such security, together 
        with all other acquisitions by the same person of 
        securities of the same class during the preceding 
        twelve months, would not exceed 2 per centum of that 
        class;
          (B) by the issuer of such security; or
          (C) which the Commission, by rules or regulations or 
        by order, shall exempt from the provisions of this 
        subsection as not entered into for the purpose of, and 
        not having the effect of, changing or influencing the 
        control of the issuer or otherwise as not comprehended 
        within the purposes of this subsection.
  (e) It shall be unlawful for any person to make any untrue 
statement of a material fact or omit to state any material fact 
necessary in order to make the statements made, in the light of 
the circumstances under which they are made, not misleading, or 
to engage in any fraudulent, deceptive, or manipulative acts or 
practices, in connection with any tender offer or request or 
invitation for tenders, or any solicitation of security holders 
in opposition to or in favor of any such offer, request, or 
invitation. The Commission shall, for the purposes of this 
subsection, by rules and regulations define, and prescribe 
means reasonably designed to prevent, such acts and practices 
as are fraudulent, deceptive, or manipulative.
  (f) If, pursuant to any arrangement or understanding with the 
person or persons acquiring securities in a transaction subject 
to subsection (d) of this section or subsection (d) of section 
13 of this title, any persons are to be elected or designated 
as directors of the issuer, otherwise than at a meeting of 
security holders, and the persons so elected or designated will 
constitute a majority of the directors of the issuer, then, 
prior to the time any such person takes office as a director, 
and in accordance with rules and regulations prescribed by the 
Commission, the issuer shall file with the Commission, and 
transmit to all holders of record of securities of the issuer 
who would be entitled to vote at a meeting for election of 
directors, information substantially equivalent to the 
information which would be required by subsection (a) or (c) of 
this section to be transmitted if such person or persons were 
nominees for election as directors at a meeting of such 
security holders.
  (g)(1)(A) At the time of filing such preliminary proxy 
solicitation material as the Commission may require by rule 
pursuant to subsection (a) of this section that concerns an 
acquisition, merger, consolidation, or proposed sale or other 
disposition of substantially all the assets of a company, the 
person making such filing, other than a company registered 
under the Investment Company Act of 1940, shall pay to the 
Commission the following fees:
          (i) for preliminary proxy solicitation material 
        involving an acquisition, merger, or consolidation, if 
        there is a proposed payment of cash or transfer of 
        securities or property to shareholders, a fee at a rate 
        that, subject to paragraph (4), is equal to $92 per 
        $1,000,000 of such proposed payment, or of the value of 
        such securities or other property proposed to be 
        transferred; and
          (ii) for preliminary proxy solicitation material 
        involving a proposed sale or other disposition of 
        substantially all of the assets of a company, a fee at 
        a rate that, subject to paragraph (4), is equal to $92 
        per $1,000,000 of the cash or of the value of any 
        securities or other property proposed to be received 
        upon such sale or disposition.
  (B) The fee imposed under subparagraph (A) shall be reduced 
with respect to securities in an amount equal to any fee paid 
to the Commission with respect to such securities in connection 
with the proposed transaction under section 6(b) of the 
Securities Act of 1933 (15 U.S.C. 77f(b)), or the fee paid 
under that section shall be reduced in an amount equal to the 
fee paid to the Commission in connection with such transaction 
under this subsection. Where two or more companies involved in 
an acquisition, merger, consolidation, sale, or other 
disposition of substantially all the assets of a company must 
file such proxy material with the Commission, each shall pay a 
proportionate share of such fee.
  (2) At the time of filing such preliminary information 
statement as the Commission may require by rule pursuant to 
subsection (c) of this section, the issuer shall pay to the 
Commission the same fee as required for preliminary proxy 
solicitation material under paragraph (1) of this subsection.
  (3) At the time of filing such statement as the Commission 
may require by rule pursuant to subsection (d)(1) of this 
section, the person making the filing shall pay to the 
Commission a fee at a rate that, subject to paragraph (4), is 
equal to $92 per $1,000,000 of the aggregate amount of cash or 
of the value of securities or other property proposed to be 
offered. The fee shall be reduced with respect to securities in 
an amount equal to any fee paid with respect to such securities 
in connection with the proposed transaction under section 6(b) 
of the Securities Act of 1933 (15 U.S.C. 77f(b)), or the fee 
paid under that section shall be reduced in an amount equal to 
the fee paid to the Commission in connection with such 
transaction under this subsection.
          (4) Annual adjustment.--For each fiscal year, the 
        Commission shall by order adjust the rate required by 
        paragraphs (1) and (3) for such fiscal year to a rate 
        that is equal to the rate (expressed in dollars per 
        million) that is applicable under section 6(b) of the 
        Securities Act of 1933 (15 U.S.C. 77f(b)) for such 
        fiscal year.
          (5) Fee collection.--Fees collected pursuant to this 
        subsection for fiscal year 2012 and each fiscal year 
        thereafter shall be deposited and credited as general 
        revenue of the Treasury and shall not be available for 
        obligation.
          (6) Review; effective date; publication.--In 
        exercising its authority under this subsection, the 
        Commission shall not be required to comply with the 
        provisions of section 553 of title 5, United States 
        Code. An adjusted rate prescribed under paragraph (4) 
        shall be published and take effect in accordance with 
        section 6(b) of the Securities Act of 1933 (15 U.S.C. 
        77f(b)).
          (7) Pro rata application.--The rates per $1,000,000 
        required by this subsection shall be applied pro rata 
        to amounts and balances of less than $1,000,000.
  (8) Notwithstanding any other provision of law, the 
Commission may impose fees, charges, or prices for matters not 
involving any acquisition, merger, consolidation, sale, or 
other disposition of assets described in this subsection, as 
authorized by section 9701 of title 31, United States Code, or 
otherwise.
  (h) Proxy Solicitations and Tender Offers in Connection With 
Limited Partnership Rollup Transactions.--
          (1) Proxy rules to contain special provisions.--It 
        shall be unlawful for any person to solicit any proxy, 
        consent, or authorization concerning a limited 
        partnership rollup transaction, or to make any tender 
        offer in furtherance of a limited partnership rollup 
        transaction, unless such transaction is conducted in 
        accordance with rules prescribed by the Commission 
        under subsections (a) and (d) as required by this 
        subsection. Such rules shall--
                  (A) permit any holder of a security that is 
                the subject of the proposed limited partnership 
                rollup transaction to engage in preliminary 
                communications for the purpose of determining 
                whether to solicit proxies, consents, or 
                authorizations in opposition to the proposed 
                limited partnership rollup transaction, without 
                regard to whether any such communication would 
                otherwise be considered a solicitation of 
                proxies, and without being required to file 
                soliciting material with the Commission prior 
                to making that determination, except that--
                          (i) nothing in this subparagraph 
                        shall be construed to limit the 
                        application of any provision of this 
                        title prohibiting, or reasonably 
                        designed to prevent, fraudulent, 
                        deceptive, or manipulative acts or 
                        practices under this title; and
                          (ii) any holder of not less than 5 
                        percent of the outstanding securities 
                        that are the subject of the proposed 
                        limited partnership rollup transaction 
                        who engages in the business of buying 
                        and selling limited partnership 
                        interests in the secondary market shall 
                        be required to disclose such ownership 
                        interests and any potential conflicts 
                        of interests in such preliminary 
                        communications;
                  (B) require the issuer to provide to holders 
                of the securities that are the subject of the 
                limited partnership rollup transaction such 
                list of the holders of the issuer's securities 
                as the Commission may determine in such form 
                and subject to such terms and conditions as the 
                Commission may specify;
                  (C) prohibit compensating any person 
                soliciting proxies, consents, or authorizations 
                directly from security holders concerning such 
                a limited partnership rollup transaction--
                          (i) on the basis of whether the 
                        solicited proxy, consent, or 
                        authorization either approves or 
                        disapproves the proposed limited 
                        partnership rollup transaction; or
                          (ii) contingent on the approval, 
                        disapproval, or completion of the 
                        limited partnership rollup transaction;
                  (D) set forth disclosure requirements for 
                soliciting material distributed in connection 
                with a limited partnership rollup transaction, 
                including requirements for clear, concise, and 
                comprehensible disclosure with respect to--
                          (i) any changes in the business plan, 
                        voting rights, form of ownership 
                        interest, or the compensation of the 
                        general partner in the proposed limited 
                        partnership rollup transaction from 
                        each of the original limited 
                        partnerships;
                          (ii) the conflicts of interest, if 
                        any, of the general partner;
                          (iii) whether it is expected that 
                        there will be a significant difference 
                        between the exchange values of the 
                        limited partnerships and the trading 
                        price of the securities to be issued in 
                        the limited partnership rollup 
                        transaction;
                          (iv) the valuation of the limited 
                        partnerships and the method used to 
                        determine the value of the interests of 
                        the limited partners to be exchanged 
                        for the securities in the limited 
                        partnership rollup transaction;
                          (v) the differing risks and effects 
                        of the limited partnership rollup 
                        transaction for investors in different 
                        limited partnerships proposed to be 
                        included, and the risks and effects of 
                        completing the limited partnership 
                        rollup transaction with less than all 
                        limited partnerships;
                          (vi) the statement by the general 
                        partner required under subparagraph 
                        (E);
                          (vii) such other matters deemed 
                        necessary or appropriate by the 
                        Commission;
                  (E) require a statement by the general 
                partner as to whether the proposed limited 
                partnership rollup transaction is fair or 
                unfair to investors in each limited 
                partnership, a discussion of the basis for that 
                conclusion, and an evaluation and a description 
                by the general partner of alternatives to the 
                limited partnership rollup transaction, such as 
                liquidation;
                  (F) provide that, if the general partner or 
                sponsor has obtained any opinion (other than an 
                opinion of counsel), appraisal, or report that 
                is prepared by an outside party and that is 
                materially related to the limited partnership 
                rollup transaction, such soliciting materials 
                shall contain or be accompanied by clear, 
                concise, and comprehensible disclosure with 
                respect to--
                          (i) the analysis of the transaction, 
                        scope of review, preparation of the 
                        opinion, and basis for and methods of 
                        arriving at conclusions, and any 
                        representations and undertakings with 
                        respect thereto;
                          (ii) the identity and qualifications 
                        of the person who prepared the opinion, 
                        the method of selection of such person, 
                        and any material past, existing, or 
                        contemplated relationships between the 
                        person or any of its affiliates and the 
                        general partner, sponsor, successor, or 
                        any other affiliate;
                          (iii) any compensation of the 
                        preparer of such opinion, appraisal, or 
                        report that is contingent on the 
                        transaction's approval or completion; 
                        and
                          (iv) any limitations imposed by the 
                        issuer on the access afforded to such 
                        preparer to the issuer's personnel, 
                        premises, and relevant books and 
                        records;
                  (G) provide that, if the general partner or 
                sponsor has obtained any opinion, appraisal, or 
                report as described in subparagraph (F) from 
                any person whose compensation is contingent on 
                the transaction's approval or completion or who 
                has not been given access by the issuer to its 
                personnel and premises and relevant books and 
                records, the general partner or sponsor shall 
                state the reasons therefor;
                  (H) provide that, if the general partner or 
                sponsor has not obtained any opinion on the 
                fairness of the proposed limited partnership 
                rollup transaction to investors in each of the 
                affected partnerships, such soliciting 
                materials shall contain or be accompanied by a 
                statement of such partner's or sponsor's 
                reasons for concluding that such an opinion is 
                not necessary in order to permit the limited 
                partners to make an informed decision on the 
                proposed transaction;
                  (I) require that the soliciting material 
                include a clear, concise, and comprehensible 
                summary of the limited partnership rollup 
                transaction (including a summary of the matters 
                referred to in clauses (i) through (vii) of 
                subparagraph (D) and a summary of the matter 
                referred to in subparagraphs (F), (G), and 
                (H)), with the risks of the limited partnership 
                rollup transaction set forth prominently in the 
                fore part thereof;
                  (J) provide that any solicitation or offering 
                period with respect to any proxy solicitation, 
                tender offer, or information statement in a 
                limited partnership rollup transaction shall be 
                for not less than the lesser of 60 calendar 
                days or the maximum number of days permitted 
                under applicable State law; and
                  (K) contain such other provisions as the 
                Commission determines to be necessary or 
                appropriate for the protection of investors in 
                limited partnership rollup transactions.
          (2) Exemptions.--The Commission may, consistent with 
        the public interest, the protection of investors, and 
        the purposes of this title, exempt by rule or order any 
        security or class of securities, any transaction or 
        class of transactions, or any person or class of 
        persons, in whole or in part, conditionally or 
        unconditionally, from the requirements imposed pursuant 
        to paragraph (1) or from the definition contained in 
        paragraph (4).
          (3) Effect on commission authority.--Nothing in this 
        subsection limits the authority of the Commission under 
        subsection (a) or (d) or any other provision of this 
        title or precludes the Commission from imposing, under 
        subsection (a) or (d) or any other provision of this 
        title, a remedy or procedure required to be imposed 
        under this subsection.
          (4) Definition of limited partnership rollup 
        transaction.--Except as provided in paragraph (5), as 
        used in this subsection, the term ``limited partnership 
        rollup transaction'' means a transaction involving the 
        combination or reorganization of one or more limited 
        partnerships, directly or indirectly, in which--
                  (A) some or all of the investors in any of 
                such limited partnerships will receive new 
                securities, or securities in another entity, 
                that will be reported under a transaction 
                reporting plan declared effective before the 
                date of enactment of this subsection by the 
                Commission under section 11A;
                  (B) any of the investors' limited partnership 
                securities are not, as of the date of filing, 
                reported under a transaction reporting plan 
                declared effective before the date of enactment 
                of this subsection by the Commission under 
                section 11A;
                  (C) investors in any of the limited 
                partnerships involved in the transaction are 
                subject to a significant adverse change with 
                respect to voting rights, the term of existence 
                of the entity, management compensation, or 
                investment objectives; and
                  (D) any of such investors are not provided an 
                option to receive or retain a security under 
                substantially the same terms and conditions as 
                the original issue.
          (5) Exclusions from definition.--Notwithstanding 
        paragraph (4), the term ``limited partnership rollup 
        transaction'' does not include--
                  (A) a transaction that involves only a 
                limited partnership or partnerships having an 
                operating policy or practice of retaining cash 
                available for distribution and reinvesting 
                proceeds from the sale, financing, or 
                refinancing of assets in accordance with such 
                criteria as the Commission determines 
                appropriate;
                  (B) a transaction involving only limited 
                partnerships wherein the interests of the 
                limited partners are repurchased, recalled, or 
                exchanged in accordance with the terms of the 
                preexisting limited partnership agreements for 
                securities in an operating company specifically 
                identified at the time of the formation of the 
                original limited partnership;
                  (C) a transaction in which the securities to 
                be issued or exchanged are not required to be 
                and are not registered under the Securities Act 
                of 1933;
                  (D) a transaction that involves only issuers 
                that are not required to register or report 
                under section 12, both before and after the 
                transaction;
                  (E) a transaction, except as the Commission 
                may otherwise provide by rule for the 
                protection of investors, involving the 
                combination or reorganization of one or more 
                limited partnerships in which a non-affiliated 
                party succeeds to the interests of a general 
                partner or sponsor, if--
                          (i) such action is approved by not 
                        less than 66\2/3\ percent of the 
                        outstanding units of each of the 
                        participating limited partnerships; and
                          (ii) as a result of the transaction, 
                        the existing general partners will 
                        receive only compensation to which they 
                        are entitled as expressly provided for 
                        in the preexisting limited partnership 
                        agreements; or
                  (F) a transaction, except as the Commission 
                may otherwise provide by rule for the 
                protection of investors, in which the 
                securities offered to investors are securities 
                of another entity that are reported under a 
                transaction reporting plan declared effective 
                before the date of enactment of this subsection 
                by the Commission under section 11A, if--
                          (i) such other entity was formed, and 
                        such class of securities was reported 
                        and regularly traded, not less than 12 
                        months before the date on which 
                        soliciting material is mailed to 
                        investors; and
                          (ii) the securities of that entity 
                        issued to investors in the transaction 
                        do not exceed 20 percent of the total 
                        outstanding securities of the entity, 
                        exclusive of any securities of such 
                        class held by or for the account of the 
                        entity or a subsidiary of the entity.
  (i) Disclosure of Pay Versus Performance.--The Commission 
shall, by rule, require each issuer to disclose in any proxy or 
consent solicitation material for an annual meeting of the 
shareholders of the issuer a clear description of any 
compensation required to be disclosed by the issuer under 
section 229.402 of title 17, Code of Federal Regulations (or 
any successor thereto), including, for any issuer other than an 
emerging growth company, information that shows the 
relationship between executive compensation actually paid and 
the financial performance of the issuer, taking into account 
any change in the value of the shares of stock and dividends of 
the issuer and any distributions. The disclosure under this 
subsection may include a graphic representation of the 
information required to be disclosed.
  (j) Disclosure of Hedging by Employees and Directors.--The 
Commission shall, by rule, require each issuer to disclose in 
any proxy or consent solicitation material for an annual 
meeting of the shareholders of the issuer whether any employee 
or member of the board of directors of the issuer, or any 
designee of such employee or member, is permitted to purchase 
financial instruments (including prepaid variable forward 
contracts, equity swaps, collars, and exchange funds) that are 
designed to hedge or offset any decrease in the market value of 
equity securities--
          (1) granted to the employee or member of the board of 
        directors by the issuer as part of the compensation of 
        the employee or member of the board of directors; or
          (2) held, directly or indirectly, by the employee or 
        member of the board of directors.
  (k) ESG Disclosures.--
          (1) In general.--Each issuer the securities of which 
        are registered under section 12 or that is required to 
        file annual reports under section 15(d) shall disclose 
        in any proxy or consent solicitation material for an 
        annual meeting of the shareholders--
                  (A) a clear description of the views of the 
                issuer about the link between ESG metrics and 
                the long-term business strategy of the issuer; 
                and
                  (B) a description of any process the issuer 
                uses to determine the impact of ESG metrics on 
                the long-term business strategy of the issuer.
          (2) ESG metrics defined.--In this subsection, the 
        term ``ESG metrics'' has the meaning given the term in 
        part 210 of title 17, Code of Federal Regulations as 
        amended pursuant to subsection (b) of the ESG 
        Disclosure Simplification Act of 2019.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    Committee Republicans believe information that is useful 
for investment decisions should be disclosed. Unfortunately, 
H.R. 4329, the ESG Disclosure Simplification Act of 2019, is 
yet another Democrat mandatory disclosure bill that will not 
provide useful information to investors but will instead be 
costly for many public companies.
    H.R. 4329 would require the SEC to create a ``Sustainable 
Finance Advisory Committee'' comprised of individuals and 
entities ``with an interest in sustainable finance.'' That 
committee would make rulemaking recommendations to the SEC, who 
would then be required to undertake a rulemaking to define 
``ESG metrics.'' Under the bill, these ``ESG metrics'' would be 
``de facto material'' for the purposes of disclosures under the 
Securities Exchange Act and the Securities Act.
    Committee Republicans believe that information required to 
be made available to investors or prospective investors should 
be actually material (that is, actually useful) for investment 
decisions. Currently, under the Securities Exchange Act of 
1934, public companies are required to file annual reports with 
the SEC to publicly disclose information that investors would 
find important to making investment decisions.\1\ If there is 
ESG-related information that is actually material to the 
investors of a public company, those companies are already 
required to make those disclosures. H.R. 4329 simply adds 
unnecessary, costly, and potentially very confusing disclosures 
for companies that do not need to make them. That will only 
discourage companies from going (or staying) public, which 
means fewer investment options for Main Street Americans saving 
for education or retirement.
---------------------------------------------------------------------------
    \1\See 15 U.S.C. Sec. 78m(a); see also, e.g., Securities Exchange 
Act rule 12b-20.
---------------------------------------------------------------------------
    Additionally, to the extent that the company is otherwise 
engaging in lawful activity, but not in ways that comport well 
with the ESG metrics developed by the Sustainable Finance 
Advisory Committee and/or the SEC, the required disclosure 
could (and likely would) be used to name and shame those 
companies, making the U.S. public markets less attractive to 
such companies. Instead of attacking American companies, 
Committee Republicans want to support American businesses and 
everyday Americans trying to save their hard-earned money. Like 
so many of the Democrat-sponsored mandatory disclosure bills 
from the 116th Congress, the bill has a greater appeal to a 
social activists than Main Street investors.
    Committee Republicans are also concerned that the bill 
fails to define ``ESG metrics'' and leaves it to the SEC to do 
the difficult work of figuring out how to make this bill 
workable. SEC Commissioner Hester Peirce has highlighted this 
difficulty: ``[t]he collection of issues that gets dropped into 
the ESG bucket is diverse, but many of them simply cannot be 
reduced to a single, standardizable score.''\2\ Committee 
Democrats want the SEC to do the impossible, and expect the SEC 
to take the blame (rather than themselves) if and when the 
``ESG metrics''' disclosure inevitably fail to be useful for 
everyday investors.
---------------------------------------------------------------------------
    \2\See Hester Peirce, ``Scarlet Letters: Remarks Before the 
American Enterprise Institute'' (Jun. 18, 2019), available at https://
www.sec.gov/news/speech/speech-peirce-061819. Ms. Peirce also noted 
that ESG scores often ``oversimplify complicated facts and thus may 
send companies scrambling to take actions that neither achieve the 
broader social goals of ESG proponents, nor serve their shareholders 
well.''
---------------------------------------------------------------------------
    For these reasons, Committee Republicans are opposed to the 
bill.
                                   David Kustoff.
                                   Barry Loudermilk.
                                   Lance Gooden.
                                   Tom Emmer.
                                   William R. Timmons IV.
                                   Scott R. Tipton.
                                   Ted Budd.
                                   Peter T. King.
                                   Roger Williams.
                                   Trey Hollingsworth.
                                   J. French Hill.
                                   Bryan Steil.
                                   John W. Rose.
                                   Warren Davidson.
                                   Anthony Gonzalez.
                                   Denver Riggleman.
                                   Andy Barr.
                                   Alexander X. Mooney.
                                   Lee M. Zeldin.
                                   Frank D. Lucas.
                                   Ann Wagner.
                                   Steve Stivers.
                                   Bill Huizenga.
                                   Blaine Luetkemeyer.
                                   Bill Posey.
                                   Patrick T. McHenry.

                                  [all]