Experts voiced concerns over some new draft bills discussed in a recent hearing. Testimonies highlighted the debate over regulation in investment.
"These attacks on the freedom to invest will lead to distorted capital markets and more costs and lower returns for businesses, pensioners, and taxpayers," Minnesota Attorney General Keith Ellison testified.
Experts raised alarm bells during a recent hearing named "Protecting Investor Interests: Examining Environmental and Social Policy in Financial Regulation." While there, they debated draft bills currently under consideration. The legislation, targeting various areas from shareholder proposals to proxy voting and sustainability directives, was met with concern about potential interference in the financial market's ability to make judicious investment decisions and worries over undue political and proxy advisory influence, according to a memorandum from the financial services committee.
Ellison defended the relevance of environmental, social, and governance (ESG) factors in investment strategies, cautioning that politically driven legislation might imperil American families' financial stability. "These attacks on the freedom to invest will lead to distorted capital markets and more costs and lower returns for businesses, pensioners, and taxpayers," Ellison warned in his testimony.
Lawrence A. Cunningham, Special Counsel at Mayer Brown LLP, underscored to congress the necessity for updated federal securities laws to safeguard investor protection and resist exploitation of the proxy voting process.
"The time is now, and your leadership is commendable to update federal securities laws to reflect these realities," Cunningham testified.
Benjamin Zycher, from the American Enterprise Institute, lambasted the politicization of business decisions and resource allocation, tracing it back to existing government policies. He urged Congress to deter further regulations that enable politically-motivated resource allocation, criticizing them as coercive and counterproductive.
"It is essential that Congress act to reverse and proscribe the regulatory actions both past and prospective facilitating this growing trend of resource use chosen on the basis of political criteria," Zycher said.
James R. Copland, from the Manhattan Institute for Policy Research, voiced unease over the increasing sway of proxy advisory and asset management entities on corporate decision-making, warning that it threatens to undermine American prosperity and democratic governance. "These trends both imperil American prosperity and interfere with our democratic, republican form of government," Copland testified.