ESG risks should be disclosed: environmental groups petition Securities and Exchange Commission
by Brian Collet — All companies should disclose the environmental, social and governance risks of their activities to aid investors in making choices.
This recommendation has been placed by a group of environmental bodies before the Securities and Exchange Commission, the US government’s finance industry watchdog.
It is a response to the commission’s request for public reaction to its report proposing changes to business and financial disclosures. In the report the commission points out that many disclosure rules have changed little in more than 30 years.
In their petition the organisations emphasise that environmental, social and governance data should be uniform to enable investors to compare companies’ risks and to decide where to invest and how to vote.
Professor Cynthia Williams, of the Osgoode Hall law school in Toronto, said: “Capital market regulation in the US depends on accurate information to direct capital, and to date there is insufficient, clear, comparable ESG data for the markets to function properly in this regard.”
Melissa Blue Sky, a senior attorney at the Center for International Environment Law in Washington, DC, observed: “More people are choosing to invest in companies without negative environmental and social impacts, but many find it difficult to assess companies’ claims.”
The petition was supported by the Center for International Environmental Law, the Center of Concern, the Environmental Investigation Agency, Foundation Earth, Friends of the Earth, Greenpeace USA, the Rainforest Action Network, the Sierra Club and Professor Williams.
For many years socially responsible investing has been concentrated on the gambling, tobacco and alcohol products industries.
It has expanded in more recent years to embrace human rights values, environmental protection, corporate corruption and labour issues.
As a result social responsibility considerations now determine investments worth $6.7tn (£5.1tn, €6tn) in the US.