House kicks off ‘ESG month’ with heated hearing

investmentnews.com:

Republicans and Democrats took shots at each other in a heated hearing on ESG Wednesday, with both sides accusing the other of being anti-capitalist on the topic of investing.

They mostly repeated the same talking points made in a handful of prior House hearings on environmental, governance and social investing — whether it is good or bad for investors and public companies. But the session Wednesday included testimony related to 18 separate Republican bills seeking to halt ESG data from being used in public pensions, limit the sway of proxy advisory firms and reverse the SEC’s stance on ESG.

The hearing was the first of six in what Republicans have dubbed “ESG month.”

“Under capitalism, the shareholders are entitled to the information they want, even if the Republicans don’t want them to have it,” said Rep. Maxine Waters, D-Calif. “Shareholders should be able to get the investment advice they want, even if it is [about] how to improve the world, rather than earnings per share.” She translated Republicans’ efforts to stymie the SEC’s suite of proposed ESG rules as “socialism” that protects donors, such as the oil and gas industry. “Ronald Reagan would be ashamed,” Waters said.

The parties clearly differed in what they mean by “ESG.” Republicans equated it with sustainable, socially responsible or impact investing, and Democrats pointing to it as a data source most often used to assess material financial risks and opportunities.

Whether ESG is good or bad for financial returns also depends on the time frame. For example, 2022 was bad for funds that excluded fossil fuel holdings, but over the past 12 months, ESG versions of standard indexes have outperformed peers.

“I was an investment advisor. I did the job,” said Rep.