On Thursday, May 21, 2020, the SEC’s Investor Advisory Committee (“IAC”) released a report urging the SEC to take the global lead in mandating material environmental, social and governance (“ESG”) disclosures from public companies.

Although there is great demand from investors and shareholders for robust ESG disclosures, in the absence of an SEC requirement, a patchwork system has emerged where various private organizations evaluate companies’ ESG programs based on disparate criteria, introducing confusing and frustration into the market.

The IAC states in its report that if the SEC does not take the lead on ESG disclosure requirements, it risks ceding its authority to other global jurisdictions that look to act sooner. Further, the IAC believes that a delay in implementing ESG disclosure requirements may cause the redirection of global capital from the U.S. to other markets that are already developing uniform ESG disclosure frameworks.

To date, the SEC has been hesitant to make ESG disclosures a required part of reporting companies’ disclosures. However, as the global market is clearly moving in that direction, it may be forced to act sooner rather than later.

If you have questions about what this may mean for your business, or about ESG policies in general, please get in touch. We would love to speak with you.

Will Stafford | wstafford@craincaton.com | 713.752.8658