The House Financial Services Committee’s Environmental, Social, and Governance (ESG) Working Group—chaired by Rep. Bill Huizinga (R-MI)—has released a new memorandum detailing their plans to protect financial investing from being diluted by non-pecuniary objectives. 

The committee’s memo, Preliminary Report on ESG Climate Related Financial Services Concerns, was released on June 23rd. 

“Across the nation, boardrooms are being held hostage by those who push policies that will lower returns for Americans trying to build a brighter and more financially secure future. House Republicans will stand up, defend the free market, and the ability for Americans to make their own financial decisions as they see fit,” said Subcommittee Chairman Huizenga. 

The document identified and recommended eight priorities for the 118th Congressional session. 

Chief among these proposed changes is reforming proxy voting systems to protect retail investors’ interests. The report said activist shareholders that possess $2,000 of company stock are “submitting hundreds of resolutions related to environmental, social, and political issues, rather than focusing on the company’s growth and competitiveness.” 

Congressional Republicans also recommend increased transparency and oversight of large asset managers—the “Big Three” (BlackRock, State Street, and Vanguard) that collectively oversee $20 trillion in assets—to ensure they prioritize pecuniary (financial) interests. 

They argue, “Congress should explore legislation to provide a more precise definition of ‘control’ to prevent potential regulatory loopholes. This would enable a more accurate assessment of the Big Three’s influence over banking organizations, triggering necessary regulatory restrictions and oversight to safeguard retail investors.” 

Another recommendation is holding proxy advisory firms like Institutional Shareholder Services (ISS) and Glass Lewis accountable. The ESG working group determined these two firms have outsized influence in proxy voting, commanding 97% of the market. 

When testifying before the House Oversight Subcommittee hearing titled “The Cascading Impacts of ESG Compliance,” IWF Center for Energy and Conservation Director Mandy Gunsasekara highlighted ESG’s negative downstream effects on American consumers: 

As American families continue to struggle under Bidenflation, increased energy costs, and an economy on the verge of a recession, a subset of financial elites and their allegiance to environment, social, and governance—or rather ‘ESG’—investing is making matters worse. While branded as an investment strategy for ‘good,’ ESG manipulates markets, as well as access to markets, in order to advance a leftist political agenda. The policies pushed by ESG end up causing more harm than good.

Last week, the House Judiciary Committee announced they’re investigating the Glasgow Financial Alliance for Net Zero (GFANZ), Vanguard, BlackRock, and State Street over alleged antitrust violations and “entering into collusive agreements to ‘decarbonize’ assets under management and reduce emissions to net zero.”

ESG proponents have long dismissed pushback to their agenda, but now recognize opponents now have staying power. Robert Eccles, a professor at the University of Oxford’s Said Business School focusing on sustainability, told attendees at a recent ESG conference to “start making friends with Republicans.” 

To learn more about the ESG Working Group’s goals, go HERE.