2021: Fitzpatrick Voted Against Requiring The Securities And Exchange
Commission To Establish New Disclosure Requirements For Publicly Traded
Companies, Which Would Require The Companies To Disclose And Define
Their Environmental, Social, And Governance Metrics, Including Climate
Risks, Political Expenditures, Executive Pay, And Tax Information. In
June 2021, Fitzpatrick voted against the Corporate Governance
Improvement and Investor Protection Act which would, according to
Congressional Quarterly, "establish new disclosure requirements for
publicly traded companies related to environmental, social, and
governance (ESG) metrics; climate-related risks; political expenditures;
executive pay; and tax information regarding overseas subsidiaries. It
would direct the Securities and Exchange Commission to require publicly
traded companies to disclose and define their ESG metrics as part of any
filing that requires audited financial statements; require companies to
disclose in any proxy or consent solicitation material for annual
shareholder meetings a clear description of the link between ESG metrics
and the company's long-term business strategy and processes used to
determine the impact of such metrics on the business strategy; and
require the SEC to establish a sustainable finance advisory committee to
identify investment challenges and opportunities associated with
sustainable finance and recommend policies to facilitate sustainable
investments. It would require publicly traded companies to include in
annual reports to the SEC information related to risks posed to the
company by climate change, including a description of actions taken to
identify and mitigate such risks and an evaluation of potential
financial impacts of risk-management strategies. It would direct the SEC
to establish rules within two years of enactment to standardize
climate-related risk disclosures, including industry-specific reporting
standards, standards for estimating and disclosing greenhouse gas
emissions, and standards for disclosing fossil fuel-related assets. It
would direct the SEC to require companies that issue securities to
disclose certain political expenditures quarterly to the commission and
shareholders -- including the date and amount of each expenditure and
whether it was made in support of or opposition to a political candidate
-- and to include in annual shareholder reports a summary of each
political expenditure greater than $10,000 in the preceding year and
planned political expenditures for the forthcoming year. It would
require publicly traded companies to include in annual reports to the
SEC information regarding pay raises for executive and non-executive
employees, including the percentage increase in the median compensation
for each group, and the ratio of the two numbers. It would require
publicly traded multinational companies to disclose annual financial and
tax information for overseas subsidiaries in each tax jurisdiction in
which they operate, including the income taxes paid, profits or losses
before income tax, assets, revenues generated from transactions with
other internal entities, and number of full-time employees in each
jurisdiction." The vote was on passage. The House passed the bill by a
vote of 215-214. The Senate did not take substantive action on the bill.
[House Vote 169,
6/16/21; Congressional
Quarterly, 6/16/21;
Congressional Actions, H.R.
1187]
Under H.R. 1187, Publicly Trade Companies Would Have To Disclose
Their Views On The Relation Between Environmental, Social, And
Governance Metrics And "Long-Term Performance." According to
Congressional Quarterly, "Companies would also have to disclose in
proxy statements their views on the link between ESG metrics and
long-term performance under the bill." [Congressional Quarterly,
2/23/21]
H.R. 1187 Would Assign The Securities And Exchange Commission To
Define Sustainability Metrics That Would Need To Be Disclosed With
The Deliberation From A Newly-Established Sustainable Finance
Advisory Committee. According to Congressional Quarterly, "The
bill would leave it to the SEC to hammer out which sustainability
metrics companies would be required to disclose, though the measure
would also mandate the establishment of a Sustainable Finance
Advisory Committee at the agency to weigh in on the deliberations."
[Congressional Quarterly,
2/23/21]
According To Rep. Juan C. Vargas, Author Of H.R. 1187, The Measure
Would Be Critical In Retrieving Information About Companies' Ethical
And Sustainable Decisions That Would Help When Deciding Whether To
Invest In Certain Companies. According to Congressional Quarterly,
"Rep. Juan C. Vargas introduced a bill that would require public
companies to disclose environmental, social and governance metrics
in their filings with the Securities and Exchange Commission [...]
'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,' Vargas said. 'This information is
essential when deciding whether or not to invest in a company or how
to vote on the company's direction."' [Congressional Quarterly,
2/23/21]
2023: Fitzpatrick Voted To Override President Biden's Veto On A Joint
Resolution That Would Overturn A Labor Department Rule That Would Allow
Retirement Plan Fiduciaries To Consider Environmental, Social And
Governance (ESG) Factors In Making Investment Decisions And Exercising
Shareholder Rights. In March 2023, according to Congressional
Quarterly, Fitzpatrick voted to override President Biden's veto on a
resolution that would "provide for congressional disapproval of the
December 2022 Labor Department rule modifying standards under the
Employee Retirement Income Security Act to allow retirement plan
fiduciaries to consider environmental, social and governance factors in
making investment decisions and exercising shareholder rights, including
when voting on shareholder resolutions and board nominations. The
December rule took effect on Jan. 30, 2023, and reversed a Trump-era
rule stating that fiduciaries may only select investments based on
'pecuniary factors.' Under the joint resolution, the December rule would
have no force or effect." The vote was on a veto override. The House
failed to acquire a 2/3 majority vote and rejected the veto override by
a vote of 219 to 200, thus President Biden's veto was sustained and the
rule remained in place. [House Vote 149,
3/23/23; Congressional
Quarterly, 3/23/23;
Congressional Actions, H.J.Res.
30]
President Biden's Veto Message Argued That Blocking The ESF
Fiduciary Rule Would Prevent Retirement Managers From Considering
Factors That May Be Relevant To Investors. According to
Congressional Quarterly, "In his veto message released Monday, the
president argued that blocking the rule through the Congressional
Review Act would prevent managers from considering an assortment of
factors that may be relevant to investors." [Congressional
Quarterly, 3/23/23]
President Biden Argued That The Resolution Would Force Retirement
Managers To Ignore Risk Factors, Disregarding Free Market Principles
And Jeopardizing Retirement Savings. According to Congressional
Quarterly, "'There is extensive evidence showing that environmental,
social, and governance factors can have a material impact on
markets, industries, and businesses. But the Republican-led bill
would force retirement managers to ignore these relevant risk
factors, disregarding the principles of free markets and
jeopardizing the life savings of working families and retirees,'
Biden said. 'In fact, this bill would prevent plan fiduciaries from
taking into account factors like the physical risks of climate
change and poor corporate governance, that could affect investment
returns.'" [Congressional Quarterly,
3/23/23]
2023: Fitzpatrick Voted To Disapprove A Labor Department Rule That
Would Allow Retirement Plan Fiduciaries To Consider Environmental,
Social And Governance (ESG) Factors In Making Investment Decisions And
Exercising Shareholder Rights. In February 2023, according to
Congressional Quarterly, Fitzpatrick voted for a resolution that would
"provide for congressional disapproval of the December 2022 Labor
Department rule modifying standards under the Employee Retirement Income
Security Act to allow retirement plan fiduciaries to consider
environmental, social and governance factors in making investment
decisions and exercising shareholder rights, including when voting on
shareholder resolutions and board nominations. The December rule took
effect on Jan. 30, 2023, and reversed a Trump-era rule stating that
fiduciaries may only select investments based on 'pecuniary factors.'
Under the joint resolution, the December rule would have no force or
effect." The vote was on passage. The House passed the resolution by a
vote of 216 to 204, thus the resolution was sent to the Senate. The
Senate passed the resolution and sent it to President Biden. President
Biden vetoed the resolution. [House Vote 124,
2/28/23; Congressional
Quarterly, 2/28/23; Congressional Actions, H.J.Res.
30]
Republicans Opposed Against ESG Factors In Investments And
Advocate For Making Investments Based Solely On Whether They Enhance
Their Retirement Savings. According to Congressional Quarterly,
"The House voted Tuesday to pass a resolution disapproving of a
Labor Department rule that allows retirement plans to consider
environmental, social and governance factors in their investment
decisions. The 216-204 vote, ahead of a similar one expected in the
Senate, takes aim at a rule that has become a rallying cry for
Republicans, who say those responsible for retirement funds should
make investment decisions based solely on whether they enhance
retirement savings." [Congressional Quarterly,
2/28/23]
The House Education And The Workforce Committee Claimed That The
Labor Rule Enabled Retirement Fiduciaries To Consider ESG Factors
And Allow Activist Investors To Invest In Left-Wing Causes And
Argued That ESG Funds Were Underperformers And High-Risk
Investments. According to Congressional Quarterly, "The House
Education and the Workforce Committee also circulated statements
Tuesday from a range of groups opposed to the rule. 'The Biden
administration is putting the retirement security of millions of
Americans at risk,' the committee said in an email. 'The Biden
administration's new rule --- which enables and encourages
retirement fiduciaries to consider environmental, social, and
governance (ESG) factors --- will allow activist investors to funnel
retirees' savings into progressive, left-wing causes. Moreover, ESG
funds are notorious underperformers and relatively high-risk,
leaving the futures of retirees less secure.'" [Congressional
Quarterly, 2/28/23]
The Labor Rule Reversed A Trump Administration Rule And Sought To
Appease Financial Firms That Wanted Clearer Regulations And Plan
Sponsors That Did Not Want An ESG Factor Mandate. According to
Congressional Quarterly, "The Labor Department sought to strike a
compromise with the rule, balancing between financial services firms
that wanted clear rules and plan sponsors that didn't want to be
required to consider ESG factors. The rule would reverse Trump
administration changes to the implementation of 1974 legislation
known as the Employee Retirement Income Security Act (PL 93-406), a
law that governs a broad range of retirement and health benefit
plans." [Congressional Quarterly,
2/28/23]
The Trump Admonition Rule Only Allowed Investments Based On
Pecuniary Factors, So The Biden Administration Clarified That ESG
Factors Could Be Used In A Risk-And-Return Analysis For Investment
Decisions If Plan Sponsors Reasonably Determined That Such Impacts
Would Be Relevant. According to Congressional Quarterly, "The
Biden administration, investors and other ESG proponents had said
the Trump administration changes created a 'chilling effect' on
sustainable investments' inclusion in retirement plans. The
department unveiled its proposal in October 2021 to open ESG-focused
retirement plans to more Americans. The rule got rid of language
that said plan fiduciaries may only select investments based on
'pecuniary,' or purely financial, factors. It also clarified that
the economic effects of ESG factors can be used in a risk-and-return
analysis for investment decisions if plan sponsors 'reasonably'
determine that those impacts are relevant." [Congressional
Quarterly, 2/28/23]
A Group Of GOP Attorneys General Sued The Labor Department In
January 2023, Arguing That The Labor Rule Hindered Protections For
Retirement Savings And Overstepped Statutory Authority. According
to Congressional Quarterly, "At least 25 Republican attorneys
general sued Walsh and the Labor Department over the rule in
January. Their complaint argued that the rule undermines key
protections for retirement savings and oversteps the department's
statutory authority under the 1974 law. The lawsuit asked the court
to toss the rule, calling it 'arbitrary and capricious' and a
violation of both ERISA and the Administrative Procedure Act."
[Congressional Quarterly,
2/28/23]
The Labor Department Rule Allowed Retirement Plans To Take In
Consideration Climate Factors In Their Investment Decisions.
According to Congressional Quarterly, "The Senate on Wednesday
cleared a resolution that would disapprove of a Labor Department
rule allowing retirement plans to consider climate factors in their
investment decisions, setting the stage for the first veto of
President Joe Biden's presidency." [Congressional Quarterly,
3/1/23]
2024: Fitzpatrick Voted To Prohibit Environmental, Social, And
Governance Investments In Retirement Plans. In September 2024,
Fitzpatrick voted for , according to Congressional Quarterly, "the bill,
as amended, that would reduce the influence of environmental, social and
governance initiatives in corporate retirement plans and their
investments. The bill would require fiduciaries to select a retirement
plan and the investments of the plan based only on financial factors and
not ESG considerations. It would allow fiduciaries to choose an
investment with an ESG element in cases where they cannot distinguish
among alternative investment plans based on pecuniary factors alone. It
would require participants of plans who seek ESG investments that are
not part of a plan's original investments to be notified by the
fiduciary of possible investment shortcomings. It also would give
fiduciaries greater responsibilities in proxy voting when dealing with
investments held by the plans to limit the influence of proxy advisory
firms and reduce their ability to advance ESG initiatives in shareholder
meetings." The vote was on passage. The House passed the bill by a vote
of 217 to 206. [House Vote 427,
9/18/24; Congressional
Quarterly, 9/18/24;
Congressional Actions, H.R.
5339]
2024: Fitzpatrick Voted To Limit Shareholder Proposals Regarding
Environmental, Social, And Governance Factors. In September 2024,
Fitzpatrick voted for , according to Congressional Quarterly, "passage
of the bill, as amended, that would place restrictions on shareholder
proposals and proxies to stem environmental, social and governance (ESG)
considerations. The bill would overturn a current Securities and
Exchange Commission rule that outlines when shareholders' proposals
must be included in a proxy statement in the company's annual meeting.
The bill also would prohibit the SEC from finalizing a rule that would
narrow the exclusion criteria for shareholder proposals. The legislation
also would allow companies to exclude proposals that they have already
implemented, and require proxy advisory firms to register with the SEC
and set standards for their services. These proxy advisory firms also
would be required to produce economic analyses for social and political
issues and would place restrictions on proxy voting. It also would
create the Public Company Advisory Committee. It will advise the SEC on
its rules, regulations, and policies on how to best protect investors
and maintain fair and orderly markets. It also would limit the agency's
ability to require public companies to disclose 'non-material'
information." The vote was on passage. The House passed the bill by a
vote of 215 to 203. [House Vote 435,
9/19/24; Congressional
Quarterly, 9/19/24;
Congressional Actions, H.R.
4790]