H.R. 1187 would require the Securities and Exchange Commission (SEC) to issue rules that define environmental, social, and governance (ESG) metrics and would require publicly traded companies to disclose and describe how those metrics affect their business strategy to shareholders and the SEC annually. Under the bill, the SEC would 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. 1187 would cost $6 million over the 2021-2026 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 the net effect over the 2021-2026 period would be negligible, assuming appropriation actions consistent with that authority.
By requiring publicly traded companies to disclose ESG metrics to the SEC and shareholders, H.R. 1187 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 ($170 million in 2021, adjusted annually for inflation).