USA: SEC publishes Acting Director's statement on ESG disclosure systems
The U.S. Securities and Exchange Commission ('SEC') published, on 11 March 2021, a statement of its Acting Director of the Division of Corporation Finance, John Coates, on Environmental, Social and Governance ('ESG') disclosure systems. In particular, the statement addresses the importance that ESG assumed for today's investors, public companies, and capital markets, noting that a substantial debate remains over the precise contents and details of what ESG disclosures might or should encompass.
More specifically, the statement highlights that while organisations should be mindful of the costs of new ESG disclosures, they must also acknowledge the costs from the absence of a consensus ESG-focused disclosure system. In addition, the statement states that for investors, despite an abundance of ESG data, there is often a lack of consistent, comparable, and reliable ESG information available upon which to make informed investment and voting decisions, resulting in a costly status quo for companies. Furthermore, the statement addresses, among other things, the differences between mandatory and voluntary disclosure systems and the advantages of achieving a single global ESG reporting framework.
Lastly, the statement recalls that the SEC's policy on ESG disclosures will need to be both adaptive and innovative, as well as should continue to adapt to existing rules and standards.
You can read the statement here.