Title: ESG Disclosure Simplification Act of 2019
Policy area: Finance and Financial Sector

Summary:
ESG Disclosure Simplification Act of 2019
This bill requires an issuer of securities to annually disclose to shareholders certain environmental, social, and governance metrics and their connection to the long-term business strategy of the issuer. The bill also establishes the Sustainable Finance Advisory Committee that must, among other things, recommend to the Securities and Exchange Commission policies to facilitate the flow of capital towards environmentally sustainable investments.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4329 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 4329

  To provide for disclosure of additional material information about 
     public companies and establish a Sustainable Finance Advisory 
                   Committee, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 13, 2019

  Mr. Vargas (for himself and Mr. Garcia of Illinois) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL


 
  To provide for disclosure of additional material information about 
     public companies and establish a Sustainable Finance Advisory 
                   Committee, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``ESG Disclosure Simplification Act of 
2019''.

SEC. 2. ESG DISCLOSURES.

    (a) In General.--Section 14 of the Securities Exchange Act of 1934 
(15 U.S.C. 78n) is amended by adding at the end the following:
    ``(k) ESG Disclosures.--
            ``(1) In general.--Each issuer the securities of which are 
        registered under section 12 or that is required to file annual 
        reports under section 15(d) shall disclose in any proxy or 
        consent solicitation material for an annual meeting of the 
        shareholders--
                    ``(A) a clear description of the views of the 
                issuer about the link between ESG metrics and the long-
                term business strategy of the issuer; and
                    ``(B) a description of any process the issuer uses 
                to determine the impact of ESG metrics on the long-term 
                business strategy of the issuer.
            ``(2) ESG metrics defined.--In this subsection, the term 
        `ESG metrics' has the meaning given the term in part 210 of 
        title 17, Code of Federal Regulations as amended pursuant to 
        subsection (b) of the ESG Disclosure Simplification Act of 
        2019.''.
    (b) Rulemaking.--
            (1) In general.--The Securities and Exchange Commission (in 
        this Act referred to as the ``Commission'') shall amend part 
        210 of title 17, Code of Federal Regulations (or any successor 
        thereto) to--
                    (A) require each issuer, in any filing of the 
                issuer described in such part that requires audited 
                financial statements, to disclose environmental, 
                social, and governance metrics (in this Act referred to 
                as ESG metrics); and
                    (B) define ESG metrics.
            (2) Sustainable finance advisory committee.--The 
        Sustainable Finance Advisory Committee established pursuant to 
        section 4(k) of the Securities and Exchange Act of 1934 shall, 
        not later than 180 days after the date of the first meeting of 
        such Committee, submit to the Commission recommendations about 
        what ESG metrics the Commission should require issuers to 
        disclose.
            (3) Materiality.--It is the sense of Congress that ESG 
        metrics, as such term is defined by the Commission pursuant to 
        paragraph (2), are de facto material for the purposes of 
        disclosures under the Securities Exchange Act of 1934 and the 
        Securities Act of 1933.
            (4) Incorporation of international standards.--When 
        amending part 210 of title 17, Code of Federal Regulations (or 
        any successor thereto) pursuant to paragraph (1), the 
        Commission may, as the Commission determines appropriate, 
        incorporate any internationally recognized, independent, multi-
        stakeholder environmental, social, and governance disclosure 
        standards.
            (5) Location of disclosure.--Any disclosure required by 
        paragraph (1) may be included in a notes section of the filing.
            (6) Delay for small issuers.--The Commission may use a 
        phased approach when applying any amendments made pursuant to 
        paragraph (1) to small issuers and may determine the criteria 
        by which an issuer qualifies as a small issuer for purposes of 
        such phased approach.

SEC. 3. SUSTAINABLE FINANCE ADVISORY COMMITTEE.

    Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is 
amended by adding at the end the following:
    ``(k) Sustainable Finance Advisory Committee.--
            ``(1) Establishment.--The Securities and Exchange 
        Commission (in this subsection referred to as the `Commission') 
        shall establish a permanent advisory committee to be called the 
        `Sustainable Finance Advisory Committee' (in this subsection 
        referred to as the `Committee').
            ``(2) Duties of committee.--The Committee shall--
                    ``(A) submit a report to the Securities and 
                Exchange Commission not later than 18 months after the 
                date of the first meeting of the Committee that--
                            ``(i) identifies the challenges and 
                        opportunities for investors associated with 
                        sustainable finance; and
                            ``(ii) recommends policy changes to 
                        facilitate the flow of capital towards 
                        sustainable investments, in particular 
                        environmentally sustainable investments;
                    ``(B) when solicited, advise the Commission on 
                sustainable finance; and
                    ``(C) communicate with individuals and entities 
                with an interest in sustainable finance.
            ``(3) Membership.--
                    ``(A) Members.--
                            ``(i) In general.--The Committee shall 
                        consist of no more than 20 members who shall 
                        each serve for one four-year term.
                            ``(ii) Representation.--Each member shall 
                        represent individuals and entities with an 
                        interest in sustainable finance, such as--
                                    ``(I) experts on sustainable 
                                finance;
                                    ``(II) operators of financial 
                                infrastructure;
                                    ``(III) entities that provide 
                                analysis, data, or methodologies that 
                                facilitate sustainable finance;
                                    ``(IV) insurance companies, pension 
                                funds, asset managers, depository 
                                institutions, or credit unions; or
                                    ``(V) other financial institutions 
                                that intermediate investments in 
                                sustainable finance or manage risks 
                                related to sustainable development.
                            ``(iii) Representation of interests.--A 
                        member may not represent a single individual or 
                        entity and shall represent types of individuals 
                        and entities with similar interests in 
                        sustainable finance.
                    ``(B) Selection.--
                            ``(i) In general.--The Commission shall--
                                    ``(I) publish criteria for 
                                selection of members on the website of 
                                the Commission and in the Federal 
                                Register; and
                                    ``(II) solicit applications for 
                                membership on the website of the 
                                Commission and in the Federal Register.
                            ``(ii) Equal share.--From the individuals 
                        who submit applications for membership, each 
                        Commissioner of the Commission shall select an 
                        equal number of the members of the Committee.
                    ``(C) Pay.--Members may not receive pay by reason 
                of their service on the Committee but may receive 
                travel or transportation expenses in accordance with 
                applicable provisions under subchapter I of chapter 57 
                of title 5, United States Code.
                    ``(D) Member transparency.--The name of each member 
                and the types of individuals and entities that such 
                member represents shall be published on the website of 
                the Commission.
                    ``(E) Staff.--The Committee shall be supported by 
                staff from the Office of the Investor Advocate of the 
                Commission that are dedicated to environmental, social 
                and governance (in this subsection referred to as 
                `ESG') issues.
                    ``(F) Authorization of appropriation.--There are 
                authorized to be appropriated such sums as are 
                necessary to finance costs associated with staff 
                dedicated to ESG issues in the Office of the Investor 
                Advocate of the Commission.
            ``(4) Sustainable finance.--For the purposes of this 
        subsection, the term `sustainable finance' means the provision 
        of finance with respect to investments taking into account 
        environmental, social, and governance considerations.
            ``(5) SEC response.--The Commission shall, not later than 6 
        months after the date on which the Committee submits a report 
        to the Commission pursuant to paragraph (2)(A), publish a 
        response to such report.''.
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