H.R. 4329 would require the Securities and Exchange Commission (SEC) to issue rules that define environmental, social, and governance (ESG) metrics and require publicly traded companies to disclose their views about those metrics to their shareholders and the SEC annually. The SEC also would be required to establish a permanent advisory committee, composed of up to 20 members, to advise the agency on sustainable finance issues.
Using information from the SEC, CBO estimates that implementing H.R. 4329 would cost $6 million over the 2020-2024 period for the SEC to issue rules and support the advisory committee. However, because the SEC is authorized to collect fees each year to offset its annual appropriation, CBO expects that any net change in discretionary spending over the 2020-2024 period would be negligible, assuming appropriation actions consistent with that authority.
By requiring publicly traded companies to disclose ESG metrics to shareholders and the SEC, H.R. 4329 would impose a private-sector mandate as defined in the Unfunded Mandates Reform Act (UMRA). The mandate’s costs would equal the expenses incurred by those companies to comply with the new disclosure requirement. Because the SEC has not issued the rules required by the bill, CBO cannot determine whether the cost would exceed the private-sector threshold established in UMRA ($164 million in 2019, adjusted annually for inflation).
If the SEC increased fees to offset the costs associated with implementing the bill, H.R. 4329 would increase the cost of an existing mandate on private entities required to pay those fees. CBO estimates that the incremental cost of the mandate would be small.
The bill contains no intergovernmental mandates as defined in UMRA.