House Passes ESG Reporting Bill

Published on: June 18, 2021

Topics: ESG and Diversity & Inclusion

The House passed the ESG Disclosure Simplification Act of 2021 (H.R. 1187), which would create a host of new reporting requirements implemented by the SEC, including ESG metrics and how they affect long-term growth.

As passed by the House, the bill will require the disclosure of: 

• Pay raise ratio (a ratio of the increase in executive to employee pay),
• Board and executive diversity (race, ethnicity, gender, sexual orientation, and veteran status),
• Workforce disclosures, including information about health and safety, pay, diversity, turnover and promotion rates, training, and the use of contractors and outsourcing.  

The bill will now go to the Senate, where its prospects are dim.  Senate Banking Committee ranking member Patrick J. Toomey (R-PA) opposes the enhanced reporting requirements, and the bill could face a filibuster hurdle in the full chamber.

Looking ahead:  The bill's failure in the Senate could potentially accelerate the SEC’s plans to promulgate several ESG-related reporting requirements, including on environmental impact and human capital metrics, through rule-making.