Action item at the end of the story.
The Environmental, Social, and Governance (ESG) movement is a phenomenon that pervades the global financial sector and is exposing the U.S. to encroachments on our national sovereignty. The House Republican ESG Working Group—led by Rep. Bill Huizenga (Michigan-04)—released a report outlining concerns about ESG in the American financial industry, including potential infringements on national sovereignty resulting from a European Union (EU) directive on “corporate sustainability” and a U.S.-EU Joint Regulatory Forum on “sustainable finance.”
Financial actors tend to focus on the “E” in ESG, that is, “environmental” or “climate” policy. It can certainly be a worthwhile goal to take steps to preserve and conserve nature. But the Working Group report reveals that national sovereignty may be considered a chip in negotiations to reach what appear to be ever-moving goalposts in protecting the environment on the global stage.
The Working Group reports that the EU’s Corporate Sustainability Reporting Directive, as well as a proposed directive from the EU on “corporate sustainability due diligence” that is currently on the table, “impose[s] significant burdens on U.S. companies. These directives have the potential to harm both the companies and their retail investors.” The Working Group also reports that the U.S. Department of the Treasury’s press release about the U.S.-EU Joint Regulatory Forum “raises concerns” that U.S. regulators are pursuing a backdoor Green New Deal. Setting aside the merits of the Green New Deal and environmental policy generally, any policy decisions about the U.S. must be made in the U.S. by legislators who we can hold accountable—not by other countries.
Global relationships are important when collaboration is necessary to protect American citizens from nefarious activity like international criminal cartels. And not all Europeans are engaged in climate groupthink—former United Kingdom Prime Minister Liz Truss warned of the economic harms of ESG when she visited the United States earlier this spring. But a powerful few’s unrealistic demands, including those tied to the “E” in ESG, create an environment more conducive to control than constructive collaboration.
Call the House Financial Services Committee at (202) 225-7502 and use our talking points HERE thank Members of the ESG Working Group for their important attention to a complicated but necessary undertaking to protect our country from ESG inroads.