House passes political spending, climate change corporate disclosures bill

The House passed legislation on Wednesday that would require public companies to disclose data to shareholders regarding key metrics such as political spending, efforts to plan for climate change risks and worker pay disparities.

Lawmakers narrowly passed the legislation by a largely party-line vote of 215-214. Four Democrats joined all Republicans in opposition, underscoring the precariousness of the historically thin House Democratic majority. 

The legislation is a package of multiple bills addressing public companies' disclosures of statistics of interest to investors, including requirements to submit quarterly reports to the Securities and Exchange Commission on political expenditures and to disclose any use of tax havens, climate change risk exposure and pay raises for employees.

Companies would be required to compare executive and nonexecutive pay increases to one another as well as to the percentage change in the consumer price index over the pay raise period.

"Mandated and standard disclosures of environmental, social and governance, or ESG, metrics, would provide improved insight into long-term business performance and areas of potential future risk," said Rep. Juan Vargas (D-Calif.), the primary sponsor of the legislative package.

But Republicans argued that the requirements would be overly burdensome and costly as well as duplicative in some areas.

"My Democrat colleagues once again are seeking to hijack our securities laws to push left-wing political and social agendas," said Rep. Bill Huizenga (R-Mich.), a senior member of the House Financial Services Committee.

"Make no mistake: This bill will increase costs on publicly owned companies, discourage companies from going public, and frankly could encourage not only private companies to stay private but even have and entice public companies to go back to being private companies," Huizenga added.

Passage of the legislation came a day after the House failed to pass a separate bill aimed at promoting equal access to credit for LGBTQ-owned businesses. Financial institutions are already obligated to report data about the race, ethnicity and sex of credit applicants who own small businesses, but the bill would expand it to include information regarding sexual orientation and gender identity.

House Democrats had scheduled consideration of the bill under an expedited process that requires a two-thirds supermajority for passage because they thought enough Republicans would support it. But only 31 Republicans joined Democrats to back the legislation, meaning that it fell short of the necessary two-thirds majority.

House Majority Leader Steny Hoyer (D-Md.) announced Tuesday night that the bill will return to the House floor next week but under rules requiring only a simple majority for passage.

"Republicans, despite being 'pro-business,' voted against my legislation to make it easier for #LGBTQ small businesses to access credit. No surprise that they rejected efforts to help business owners simply because of who they are & whom they love. Shameful during #Pride," tweeted Rep. Ritchie Torres (D-N.Y.), the first gay Afro-Latino elected to Congress and the author of the bill.