Huizenga Delivers Remarks at Hearing to Scrutinize the Failed Use of ESG Standards and the Influence of Proxy Advisors

Huizenga Delivers Remarks at Hearing to Scrutinize the Failed Use of ESG Standards and the Influence of Proxy Advisors

Washington, September 10, 2024 -

Today, the House Financial Services Subcommittee on Oversight and Investigations, led by Chairman Bill Huizenga (MI-04), is holding a hearing entitled "The Fall of ESG: Scrutinizing the Failed Use of Environmental, Social, & Governance Standards and the Influence of Proxy Advisors."

Watch Chairman Huizenga's opening remarks here.

Read Chairman Huizenga's opening remarks as prepared for delivery:

"Across the country, investors are being held hostage by those who don't want to maximize retirement profits, but rather seek to push a far-left social and political agenda.

"The rapid rise and fall of ESG investing can be likened to the dot-com bubble and eventual crash nearly 20 years ago. And just like then, investors have been leaving in record numbers.

"As of this summer, global investors have withdrawn over 40 billion dollars from ESG equity funds, which have been plagued by poor performance, and in some cases, scandal.

"The ESG movement has reached its peak and investors, hedge funds, and companies are experiencing the costly effects of focusing on ESG initiatives rather than creating shareholder value.

"Regrettably, the ESG movement is being kept afloat by familiar allies.

"Democrats, progressive activist investors, and proxy advisory firms themselves have conspired to push woke ideology on millions of unsuspecting American investors.

"Let me be clear, this debate is not about whether investors should or should not invest in ESG funds. It is about one simple fact.

"Firms have a responsibility, a fiduciary duty, to maximize shareholder return. Period.

"Under the Biden-Harris Administration, Americans, who are trying to build a secure financial future, are instead facing lower returns.

"The continued prioritization of ESG initiatives by the Biden-Harris Administration is a deliberate strategy to circumvent the lack of congressional support for progressive environment and social policy measures.

"This approach undermines traditional and legal government structures and has turned our financial system into a political battlefield.

"Sadly, my friends on the other side of the aisle will paint a much different picture.

"During today's hearing, Republicans will highlight three, indisputable facts.

"First, we will emphasize how the inclusion of ESG metrics in financial reporting documents muddies the water for investors while taking companies' focus away from financial goals to quiet climate activists.

"Second, it will debunk the myth that environmental and social funds outperform other portfolios. I'm here to tell you, they do not.

"And lastly, we'll highlight the conflicts of interest inherent in the proxy advisory industry. The proxy process is broken. It no longer promotes long-term shareholder value and operates without transparency or accountability.

"Activists have hijacked the shareholder proposal process, becoming the de facto standard setters for corporate governance policies in the U.S. Their heightened influence is increasingly concerning when considering the fact that the two largest proxy advisory firms control an estimated 97 percent of the market.

"Coupled with the recent politicization of the SEC, proxy advisory firms have been given immense power to shift policy-often using a one-size-fits-all framework to promote a liberal, social agenda.

"Companies have a decision to make.

"Will they stand by quietly and let bureaucrats in Washington drive up costs and regulatory burdens, ultimately harming their very everyday investors, or will they stand up to the out-of-touch unrealistic policies being pushed by the Biden-Harris Administration?

"Republicans will continue to stand with those investors, those who are saving for retirement and working to build a more secure future. We will continue developing policies that prioritize returns, promote economic growth, enhance financial security, and safeguard our capital markets for all.

"I look forward to hearing from our witnesses today and with that, I yield back the balance of my time."

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