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House Republicans to Grapple With Wall Street Over ESG

By    |   Monday, 10 July 2023 11:41 AM EDT

House Republicans are set to grapple with Wall Street in the coming weeks over corporations' integration of climate and social goals into their business plans, further straining an already frayed relationship.

GOP members of the House Financial Services Committee will hold hearings and vote on bills that are designed to make big investment managers backpedal on the adoption of environmental, social and governance (ESG) goals, Politico reported.

"I've had a personal conversation with Larry Fink at BlackRock about this," Rep. Andy Barr, R-Ky., told the outlet. "I've had a conversation with the CEO of Vanguard about this. Our objective is not to fight for the CEOs of these companies. Our objective is to defend retail investors in America."

Republicans who sit on the House Financial Services Committee seem to be focusing on areas where they'll clash the least with the industry's leading firms, while billing their efforts as taking Wall Street to task on "woke" capitalism.

House Democrats are supporting Wall Street's embrace of ESG principles, with Rep. Sean Casten, D-Ill., telling Politico, "We'll continue to be the voice that's defending the fact that the market should have choice."

The committee seeks to target corporations that are heavily involved in ESG investing.

While critics say the strategy is a product of political pressure from the left that threatens investor returns, proponents claim that addressing issues such as climate change is necessary for long-term investing and say that consumers are in favor of it.

"Investors are demanding it," Bryan McGannon, managing director of sustainable investing advocacy group US SIF, told Politico. "But also the financial industry is realizing, Wait a second, here is a whole other set of data giving us information about how companies are run."

Adam Brandon, president of the conservative FreedomWorks, said ESG is "another avenue for state control of the economy and of society." The Republican House majority "was elected by the people to reverse this course of action," he said.

Mandates from the people aside, the House Financial Services Committee appears to be picking its battles with Wall Street carefully.

"ESG is maybe a symptom of the larger concern of 'woke' capitalism," Rep. Bill Huizenga, R-Mich., who leads committee Republicans' ESG working group, told Politico. "This is part of the reason why [House Financial Services Chair Patrick McHenry] asked me to take this on. Let's narrow the scope … because if we go fight this multifront war, we're going to lose."

On Thursday, Republicans on the House Judiciary Committee took a more aggressive tone with Wall Street firms BlackRock, Vanguard and State Street, sending letters that demanded information about their work with an international industry coalition aimed at reducing greenhouse gas emissions.

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House Republicans are set to grapple with Wall Street in the coming weeks over corporations' integration of climate and social goals into their business plans, further straining an already frayed relationship.
house, republicans, finance, esg, investing
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2023-41-10
Monday, 10 July 2023 11:41 AM
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