Further to our earlier report, in his remarks today before the SEC Investor Advisory Committee, SEC Chair Clayton took the opportunity to express his broadscale views on ESG disclosure (which was among the principal meeting agenda topics) - most notably:
- Although third-party ESG standards may facilitate comparability across companies, that doesn't mean companies should be required to adhere to them to comply with the SEC rules.
- The suitability of any particular third-party ESG disclosure framework is company facts & circumstances-specific.
- In complying with the SEC disclosure rules, companies should focus on providing material disclosure that a reasonable investor needs to make informed investment and voting decisions based on their particular facts & circumstances.
- Asset managers who are required to vote in the best interest of their clients should also focus on each company’s particular facts & circumstances. Clayton emphasized that investment advisers' fiduciary duty to act in their clients' best interests means they can't put their own interests ahead of the interests of their clients—whether the advisers' interests relate to their compensation, ESG matters or anything else.
- The SEC doesn't weigh in on particular investment strategies, the success of which depend on multiple factors - which may or may not include ESG. The key from the SEC's perspective is that "investors have full and fair disclosure of the material facts about the investment strategy their fiduciary is following so that they are in a position to make informed investment choices."