Corporate Reporting
ESG Reporting Requirements

Dialog about SEC-on-new-ESG-reporting-initiative-15818

Burgess COMMENTARY

Peter Burgess

Donato Calace • 1st Director Of Innovation at Datamaran 1d

Reading the petition to the US SEC for 'a rulemaking on environmental, social, and governance (ESG) disclosure' authored by Cynthia Williams and Jill E. Fisch.

Materiality is a cornerstone of the petition. A key passage is:

'Currently the European Union is developing a taxonomy of environmentally sustainable activities, as well as developing benchmarks for low-carbon investment strategies, and regulatory guidance to improve corporate disclosure of climate-related information. To the extent that US companies fail to disclose information which global investors are being encouraged, and in some cases required, to consider, they will be at a disadvantage in attracting capital from some of the world’s largest financial markets. This highlights that US corporate reporting standards will soon become outdated if they are not revised to incorporate global developments regarding the materiality and disclosure of ESG information.'

'../../DBpdfs/Corporate-Reporting/SEC-on-new-ESG-reporting-initiative-15818.pdf'

Clearly better disclosure about the IMPACT of economic activity on issues beyond financial transactions and profit is essential but better ESG reporting by companies is not enough. The widely argued idea that better ESG improves profit performance and related stock prices only works in a tiny number of cases. Really significant reduction in detrimental environmental impact absolutely has to reduce conventional financial profits, though it will improve true sustainability and impact on society. More than anything we have to figure out how to number impact on society and impact on the environment as rigorously as we number the transactions that allow the reporting of profit. PeterB

If the Commission or Staff have any questions, or if we can be of assistance in any way, please contact either

Osler Chair in Business Law Cynthia A. Williams, Osgoode Hall Law School, who can be reached at (416) 736-5545, or by electronic mail at cwilliams@osgoode.yorku.ca; or

Saul A. Fox Distinguished Professor of Business Law Jill E. Fisch, University of Pennsylvania Law School, who can be reached at (215) 746-3454, or by electronic mail at jfisch@law.upenn.edu.

'../../DBpdfs/Investment/GSIA-Sustainable-Investment-Review-2016.pdf'