SEC Commissioner raises questions about adding to ESG disclosures

Republican SEC Commissioner Elad Roisman spoke to the National Investor Relations Institute on Tuesday about the SEC's consideration of new climate change and human capital disclosure requirements. He reiterated some of the concerns he voiced recently about whether and to what extent new rules were required.  In particular, Commissioner Roisman underscored a number of considerations the SEC should keep in mind as it considers whether additional ESG disclosures are required, including:  

- The SEC should be clear about what ESG information is missing from what companies are currently providing - specifically, the SEC should ask, is the problem standardization, content, or both (among others)?  

- Is the apparently missing ESG information "material to an investment decision" as that has been defined under the federal securities laws - meaning, is there a substantial likelihood that a reasonable investor would consider the apparently missing ESG information important in deciding how to vote or make an investment decision?  

- Who or what is this "reasonable investor?" Commissioner Roisman sensibly suggests this would be someone whose interest is in a financial return on an investment.

- While legislative bodies in other countries have required disclosures in pursuit of advancing societal goals, is it part of the SEC's mission to mandate certain ESG disclosures? Is the SEC equipped to require climate-focused issues, such as greenhouse gas emissions?

There are so many fair questions raised as part of the current debate about whether and to what extent the SEC should mandate further ESG disclosures (and Commissioner Roisman to his credit has raised more than the ones I noted above). These clearly are valid questions that I'm sure will be considered as the SEC progresses its rule-making in this area.