“Information from ESG disclosures will help investors have greater insight into what companies are doing to reduce their carbon footprints and to address important issues like climate change, diversity, and labor rights," said Rep. Vargas. "Investors in my district have increasingly been demanding public companies disclose ESG information. My bill will help ensure clarity and comparability in disclosure of companies’ practices, by developing a much-needed comprehensive ESG disclosure framework."

The lack of standardized ESG metrics has been increasingly recognized as a problem in financial reporting, as it inhibits the comparability of information and opens the door to companies cherry picking what they report. It was with this exact issue in mind that the Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) decided to merge into the Value Reporting Foundation. It has also been the motivation for the International Financial Reporting Standards Foundation to consider forming a Sustainability Standards Board of its own, as well as a joint project by major sustainability organizations (including the VRF) to promote interoperability between their respective frameworks.

The package of bills also contains provisions that would mandate that companies disclose spending on political activities; boost current pay disclosure laws to include compensation increases for management compared to the average worker; and disclose climate risks, tax havens and offshoring activities, workplace demographic information, cybersecurity risks and the degree to which a company relies on forced Uyghur labor. It also mandates a study on ESG matters for small businesses.