Important ESG Disclosure Recommendations from The SEC’s Advisory Group

On May 14, 2020, the Investor-as-Owner Subcommittee of the SEC Investor Advisory Committee
made new recommendations relating to ESG disclosure, calling sustainability “one of the most significant set of business factors” faced by issuers. The Subcommittee calls on the SEC to make sure the US takes the lead on transparent, material, consistent disclosure.

The full report is attached below.

Highlights:

The use of ESG-related disclosures has gone from a fringe concept to a mainstream, global investment and geopolitical priority. At the end of 2018, the US SIF Foundation identified $11.6 trillion in US-domiciled sustainable, responsible, and impact investment strategy assets, of which $8.6 trillion were managed on behalf of institutional investors and $3.0 trillion were managed on behalf of individual investors. …

Today we are recommending that the Commission begin in earnest an effort to update the reporting requirements of Issuers to include material, decision-useful, ESG factors. To begin this process, for example, the Commission could undertake a series of outreach efforts to investors, Issuers and other market participants which could include roundtables, RFI and other actions on this topic. Both investor and Issuer input is crucial to this process. The learnings from these actions/consultations would help the Staff to review and evaluate multiple options or approaches to updating the reporting requirements regarding material ESG issues. 

into their investment analysis and decision-making investment processes.

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