REPS. VARGAS AND GARCIA INTRODUCE THE ENVIRONMENTAL, SOCIAL, AND GOVERNANCE DISCLOSURE SIMPLIFICATION ACT
Washington, D.C. (February 19, 2021) – Representatives Juan Vargas (CA-51) and Jesus “Chuy” Garcia (IL-04) introduced the ESG Disclosure Simplification Act which will require public companies to disclose certain environmental, social, and governance (ESG) matters in annual filings with the Securities and Exchange Commission (SEC).
The ESG Disclosure Simplification Act will also require public companies to disclose a description of the company’s views on the link between ESG metrics and long-term business performance annually in their proxy statements. This bill was originally introduced in the 116th Congress and passed out of the House of Representatives Financial Services Committee in 2019.
“We have seen how a company’s approach to the climate crisis, diversity among its leadership, and its receptiveness to social change have affected its business in the past, as well as its impact on the public’s well-being. This information is essential when deciding whether or not to invest in a company or how to vote on the company’s direction. These matters are real and they are relevant,” said Rep. Vargas. “Our bill, the ESG Disclosure Simplification Act, recognizes the materiality of environmental, social, and governance matters and would allow companies’ commitment to these issues to be more easily compared and evaluated by investors.”
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 executive and board levels.
“Our communities deserve to know if companies are protecting our environment and treating their workers fairly. I’m introducing the Environmental, Social, and Governance (ESG) Disclosure Simplification Act with Congressman Vargas to improve and simplify disclosures about corporate social responsibility from publicly traded companies,” said Rep. Jesús “Chuy” García. “This bill will help investors and the public understand what companies are doing to protect human rights, sustainability, and racial and gender equity.”
The act will also create a Sustainable Finance Advisory Committee that would make recommendations on which ESG metrics public companies should be required to disclose. In addition, the committee will recommend policy changes that would encourage the flow of capital toward sustainable finance.
Vargas represents California's 51st Congressional District which includes the southern portion of San Diego County, all of Imperial County, and California's entire U.S.-Mexico border. Vargas was first elected to the U.S. House of Representatives in 2012 and is currently serving his fifth term in Congress.