The Fall of ESG: Scrutinizing the Failed Use of Environmental, Social, &... (EventID=117568)

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On Tuesday, September 10, 2024, at 2:00 p.m. (ET) Subcommittee on Oversight and Investigations Chair Huizenga and Ranking Member Green will host a hearing entitled, “The Fall of ESG: Scrutinizing the Failed Use of Environmental, Social, & Governance Standards and the Influence of Proxy Advisors."
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Witnesses for this one-panel hearing will be:
• Charles Crain, Vice President of Domestic Policy, National Association of Manufacturers
• Tim Doyle, Founder and Principal, Doyle Strategies
• Michael Frerichs, Treasurer, State of Illinois
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Background:
Environmental, Social, and Governance (ESG) initiatives of companies throughout the country appear to have reached their peak and are falling out of favor with investors. In 2023, sustainable funds, which prioritize ESG factors when evaluating investments,2 realized substantial outflows. In total, these funds saw outflows of $13 billion due to substandard performance, Outflows in the first quarter of 2024 alone reached $8.7 billion. Investors have pushed to prioritize shareholder value and financial returns, as firms continue to step away from progressive organizations like Climate Action 100+.
Additionally, the proxy advisory industry is now seeing a decline in voting support for ESG initiatives. Over the past decade, proxy advisory firms have prioritized social and political objectives, with their clients automatically casting votes based on the proxy firms’ recommendations. This has led to proxy firms’ having an outsized influence, which is evidenced by ESG and anti-ESG shareholder proposals increasing by 5.2 percent above the number of proposals from 2023.6 The Subcommittee will review the outsized influence of proxy advisory firms.
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Hearing page: democrats-fina...