Investors Urge SEC to Push for More ESG Disclosures

Thousands of investors and advocates from large asset managers to individual investors have sent their thoughts to the SEC before the deadline on the public comment period that covered the topic of corporate disclosures on ESG issues, Reuters reports.

The SEC stated it could propose new rules on ESG disclosures in October, marking a drastic change under new SEC chair Gary Gensler, who was nominated by President Joe Biden as part of the new administration’s focus on climate change and social injustice.

“The current state of climate change disclosure does not meet our needs,” Ceres, a Boston-based coalition of more than 500 investors, environmental organizations, and public-interest groups, said in one of the letters.

On the other hand, lobby groups including trade groups for petroleum producers and banks urged the SEC to provide more leeway in ESG disclosures, arguing that one-size-fits-all requirements do not account for the various differences between industries.

“Disclosure mandates should not be prescriptive, but rather should continue to be flexible so that disclosures respond to changes in facts, circumstances, risks and other developments,” Tom Quaadman, an executive vice president at the U.S. Chamber of Commerce, said in a letter.

There is also greater focus on the S, or social, aspect in the ESG criteria. Investors contended that improved public disclosures of how a company’s management attracts, develops, and retains personnel can reveal a firm’s long-term outlook. They want to be able to hold companies accountable for their treatment of workers.

“Stronger human capital reporting, especially quantitative metrics rather than just qualitative narrative, is associated with higher returns on invested talent and higher operating margins and better risk-adjusted returns,” Eleanor Eagan, a research director at the Center for Economic and Policy Research’s Revolving Door Project, said.

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