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Rubio Presses SEC for More Disclosure Rules on China Investments

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(Bloomberg) — Senator Marco Rubio wants the Securities and Exchange Commission to put one issue front and center in the regulator’s focus on environmental, social and governance issues: China.

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Rubio, a Florida Republican, said in a letter to SEC Chairman Gary Gensler on Wednesday that rules in the offing that would require publicly-traded companies to disclose more about workforce diversity and ESG-related efforts must also apply to Chinese companies that trade in the U.S.

Leaving them out, he said, would be “highly inconsistent and arbitrary.” Rubio also wants U.S. companies that do business in China and funds that hold investments from there to release the same information.

Rubio focused his criticism on the Chinese government’s treatment of the Uyghurs, a mostly Muslim ethnic group, in the Xinjiang region of western China and on recent crackdowns on pro-democracy protesters in Hong Kong.

“The PRC under the control of the CCP is committing egregious human rights violations, including crimes against humanity and genocide,” Rubio said, referring to the People’s Republic of China and the Chinese Communist Party. He added that proposed disclosures for supply chain vulnerability should also include potential threats by “governments or agents of governments.”

“Given the CCP’s control over strategic sectors in China and elsewhere, supply chains located in China or which rely on PRC-based partners pose risks to resiliency and sustainability,” Rubio said, citing the coronavirus pandemic as an example of supply-chain vulnerability.

Rubio’s letter comes as Gensler has laid out plans for the regulator to consider almost 50 rules, including regulations to bolster corporate disclosures of risks from climate change as well as diversity of boards. Earlier this year, the agency announced that it had formed a task force of lawyers to investigate misconduct regarding ESG disclosures.

Rubio suggested that any inconsistency between enforcing the rules in the U.S. and China would be taken as an indication that the proposed rules are more about politics rather than policy, concluding his letter by saying that a failure to be consistent would show that the ESG rules are “an arbitrary attempt to influence issuers on certain domestic political affairs.”

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