Further to his recent remarks before the Corporate Board Member ESG Board Forum, which focused primarily on the costs and burdens associated with any new SEC ESG disclosure rulemaking (we reported on here), SEC Commissioner Elad Roisman’s must-read speech this week at NIRI’s virtual conference: “Can the SEC Make ESG Rules that are Sustainable?”, homed in on three other questions he had previously identified as critical to any such rulemaking:
- What precise items of “E,” “S,” and “G” information are investors not getting that are material to making informed investment decisions?
- If we were able to identify the information investors need, how would the SEC come up with “E” and “S” disclosure requirements—now, and on an ongoing basis? What expertise do we need?
- If the SEC were to incorporate the work of external standard-setters with respect to new ESG disclosure requirements: how would the agency oversee them—in terms of governance, funding, and substantive work product—on an ongoing basis? And what kind of new infrastructure would be required inside the SEC and at the standard-setters themselves?
Notably, Commissioner Roisman’s remarks touch on a number of concerns and challenges the Society raised in its comment letter in response to former SEC Acting Chair Allison Herren Lee’s request for input on climate change disclosure, including the volume, and varying and continually evolving, nature of requests for different types of ESG information companies receive from investors and others; the importance of financial materiality; the SEC’s statutory role and its mission; and the potential disconnect or lack of alignment in the views, interests, and objectives of what Commissioner Roisman dubs as the “true investors” versus those of institutional investors and asset managers.
See “Commissioner Elad Roisman Raises Questions on ‘Materiality’ for an ESG Disclosure Framework” (Cadwalader); “SEC fault lines widen over ESG ‘materiality’” (Responsible Investor); and our recent reports: “Society Submits Climate Disclosure Comment Letter” and “Big Three’s Influence on Proxy Voting Reduces Impact of Other Investors.”
This post first appeared in the weekly Society Alert!