Jun. 30, 2022

HARRISBURG – Rep. Frank Ryan (R-Lebanon) and about two dozen of his House colleagues sent a letter to the enforcement division of the U.S. Securities and Exchange Commission (SEC) today, raising concerns that publicly traded corporations are increasingly becoming involved in environmental, social and governance (ESG) issues outside their stated mission, which “creates a moral hazard for the organization, the investing public, the employees and an entire supply chain.” They contend the fiduciary responsibilities of boards of directors must be examined as corporations go down this uncharted path.

“As members of the Pennsylvania House of Representatives, we have become increasingly concerned about the potential harm these practices may have on the investing public, including the public pension systems that we, as legislators, are partially responsible for funding,” they said.

Ryan, a certified public accountant and expert in corporate governance before being elected in 2016, said what is needed is a robust system of internal controls that ensures the “tone at the top” is uniform throughout the corporation and enables it to achieve operational effectiveness and efficiency, financial reporting reliability, and adherence to applicable laws and regulations.

In their letter to the SEC, the lawmakers named GOOG (Alphabet), DIS (Disney) and TWTR (Twitter) as examples of corporations involved in social issues without an effective system of internal controls and risk assessment. They said such practices put their investors in a financially precarious position. 

“We are requesting that the SEC investigate these publicly traded companies and their fiduciary practices, as well as their systems of internal controls related to corporate governance. Our public pension plans are set up to protect the annuitant and beneficiaries, and a rogue ESG policy could erode our ability to act as responsible fiduciaries,” they said.

Joining Ryan in signing the letter to the SEC were: Reps. Dawn Keefer (R- York/Cumberland); Rob Kauffman (R-Franklin); Craig Staats (R-Bucks); Budd Cook (R-Washington/Fayette); Kate Klunk (R-York); Joe Hamm (R-Lycoming/Union); Sue Helm (R-Dauphin/Lebanon); Perry Stambaugh (R-Cumberland/Perry); Milou Mackenzie R-Lehigh/Montgomery/Northampton); Ryan Mackenzie (R-Berks/Lehigh); Tim Twardzik (R-Schuylkill); Doyle Heffley (R-Carbon); Paul Schemel (R-Franklin); Andrew Lewis (R-Dauphin); Mark Gillen (R-Berks/Lancaster); Barb Gleim (R-Cumberland); Louis Schmitt (R-Blair); Stephanie Borowicz (R-Centre/Clinton); Aaron Bernstine (R-Beaver/ Butler/Lawrence); David Zimmerman (R-Lancaster) Marci Mustello (R-Butler); Tracy Pennycuick (R-Montgomery); and Rob Mercuri (R-Allegheny).

Representative Frank Ryan
101st Legislative District
Pennsylvania House of Representatives

Media Contact: Donna Pinkham
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