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The
deadline for the public to submit comments to the SEC on the
topic expired on Monday. Thousands of investors and advocates,
from large asset managers to individual investors, as well as
companies and trade groups made submissions, which were
accessible on the SEC website.
The SEC said last week it may propose new rules on ESG
disclosures in October. Such a move would mark a big change
under new SEC chair Gary Gensler, who was nominated by President
Joe Biden as part of a broader push to tackle 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.
The group called on the SEC to take a broad view of the impact
of climate change, including the implications for human rights
and the connection between climate, water, food and forests.
Companies and corporate lobby groups including trade groups for
petroleum producers and banks, on the other hand, urged the SEC
to give them broad discretion in their ESG disclosures. They
argued one-size-fits-all requirements do not work in practice.
Companies themselves are best placed to assess which information
is the most important or material for their investors, they
said.
"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,"
wrote Tom Quaadman, an executive vice president at the U.S.
Chamber of Commerce.
The United States has no specific climate disclosure rules. It
also has not agreed on definitions for key terms such as
sustainable and has no uniform standards for measuring corporate
environmental goals or quantifying and reporting climate risks,
although many companies make ESG disclosures under a range of
voluntary standards.
The public comments will help inform the SEC's rulemaking, which
must still undergo a formal process of consideration.
The stakes are high. More Wall Street fund managers are throwing
their weight behind investor demands to companies on ESG issues.
They are turning up the heat by publicizing how and why they
voted, as billions of dollars flow every day into funds focused
on sustainable investing.
In the letters reviewed by Reuters, investors argued public
disclosures of how a company's management attracts, develops and
retains personnel -- also known as its human capital -- can shed
light on its long-term prospects. They also want to be able to
hold companies accountable on how they treat their 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," said Eleanor Eagan, a
research director at the Center for Economic and Policy
Research's Revolving Door Project, a Washington-based non-profit
organization that aims to educate investors.
Other investor-focused groups, such as the Sustainability
Accounting Standards Board and the Principles for Responsible
Investment, also said the SEC needs robust, consistent
disclosures to help investors measure human capital metrics
across sectors.
"For the SEC to get this right, investors will need to be very
clear about what they are interested in and what they aren't,"
said Aniket Shah, who leads ESG and sustainability research at
investment bank Jefferies Financial Group Inc.
(Reporting by Katanga Johnson in Washington, D.C.; Editing by
Greg Roumeliotis and Cynthia Osterman)
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