The Interfaith Center on Corporate Responsibility (ICCR), a coalition of US institutional investors that engage companies on the environmental and social impacts of their operations, has urged US Senators not to pass the Financial CHOICE Act.

The ICCR sent a letter to all Senators explaining why investors oppose the proposed law which was passed by the House of Representatives last month despite extensive lobbying against it, particularly by the Council of Institutional Investors. The Act was developed and proposed by the House Finance Services Committee chaired by Jeb Hensarling.

Institutional investors are particularly opposed to the Act because it will effectively stop shareholders putting forward shareholder resolutions in the US which are an important way of pushing through corporate governance reform and highlighting sustainability concerns, such as climate change. Investors also argue the Act will roll back curbs on abusive pay practices and burden the Securities and Exchange Commission with unneeded cost-benefit requirements.

The ICCR letter was signed by 166 institutional investor members of ICCR that engage in dialogue with the corporate management of the companies that they hold shares in to improve corporate performance on issues impacting communities around the world, including climate change, corporate water stewardship, human rights and health care.

The letter stated: "For over four decades ICCR members have used the proxy process to engage hundreds of multinational corporations on a host of environmental, social and governance topics in order to promote greater justice and sustainability in addition to improved financial performance. As faith- and values-based investors, we believe fundamentally that the management of our investments should be aligned with our values, and that ethical and sustainable business practices are in the long-term interests of companies and investors."

For the Republicans that back the bill and are in the majority in the House and the Senate, this is an opportunity to reverse the Dodd-Frank reforms which were passed in the wake of the 2008 financial crash.

 Josh Zinner, ICCR’s chief executive said: "The CHOICE Actis dangerous on multiple levels and it is crucial that the Senate reject it. From the perspective of financial reform, this bill would roll back Dodd Frank rules that are creating a fairer and more transparent financial services marketplace and reducing the excessive risk-taking by banks that was responsible for the 2008 meltdown. From the perspective of shareholder democracy, the CHOICE Act is a brazen attempt to eliminate shareholders’ ability to file proxy resolutions – a highly effective corporate accountability tool that has been beneficial to companies and has produced meaningful change on important environmental, social and governance issues.”

When launching the Act Hensarling, claimed: "Our plan lifts bureaucratic red tape intended for big banks on Wall Street off of community banks and credit unions on Main Street. It expands access to capital for small businesses and innovative companies so that they can grow and create jobs. This will foster economic growth for all Americans, not just those at the top."