H.R. 1277 would require public companies to disclose annually information on the racial, ethnic, gender, and veteran composition of its board of directors (including nominees) and executive officers to the extent that information is voluntarily provided. The bill also would require public companies to disclose if their boards of directors have adopted plans to promote diversity. Under the bill, the Securities and Exchange Commission (SEC) would issue three recurring reports, including one on the best practices for complying with the new disclosure requirements. Finally, the SEC would be required to establish an advisory group on diversity to study and report to the Congress on the diversity of boards of directors of public companies.
Using information from the SEC, CBO estimates that implementing H.R. 1277 would cost about $1 million over the 2021-2026 period. However, because the SEC is authorized to collect fees each year to offset its annual appropriation, CBO expects that the net effect over the 2021-2026 period would be negligible, assuming appropriation actions consistent with that authority.
H.R. 1277 would impose private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). CBO estimates that the cost of the mandates would be well below the threshold established in UMRA ($170 million in 2021, adjusted annually for inflation).