trending Market Intelligence /marketintelligence/en/news-insights/trending/0fyk6k7_s8gk1dxxcltx0a2 content esgSubNav
In This List

SEC commissioner says agency could do more on climate-related disclosures

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Podcast

Street Talk Episode 87


SEC commissioner says agency could do more on climate-related disclosures

The SEC could be doing more to ensure that companies are disclosing the information investors need, including on climate-related risks, to make wise decisions about their financial holdings, but is unlikely to do so anytime soon, said SEC Commissioner Robert Jackson.

"Our markets reflect a fundamental bargain between investors and the companies they own," Jackson said at a May 31 conference in Washington, D.C., hosted by the US SIF: The Forum for Sustainable and Responsible Investment. "The bargain is this: We give you more money, you give us the information we need to know what you're doing and why it makes sense."

"I guess I missed the day when" it was decided that "lawyers that work in Washington" are the ones who decide what information is relevant, added Jackson, a Democrat appointed by President Donald Trump and sworn in at the agency in January.

Jackson was referring to the ongoing debates within companies and at the SEC over what information the corporations should be required to include in financial filings to the SEC and what they can withhold from the public or merely published on their websites.

SNL Image
SEC Commissioner Robert Jackson was an appointee of President Donald Trump and joined the agency in January.
Source: SEC

A big divide exists between what boards and investors see as important, said Keir Gumbs, a partner with law firm Covington & Burling LLP who represents some of the shareholders that have proposed resolutions for companies' annual meetings. While many corporate boards agree that environmental, social and governance issues are important, they may disagree with investors on whether the companies need to disclose more than they already have on those issues, Gumbs said during the conference.

Two of the most common shareholder proposals in this year's annual meeting proxy season have been pushing companies to disclose their risks related to the potential global transition to a low-carbon economy and their political spending and lobbying activities, Jackson said.

Shareholder resolutions in the U.S. largely are symbolic in nature. Although companies tend to cooperate with measures that garner majority support, many of them have sought the SEC staff's permission to not hold votes on particularly controversial issues such as climate change. The SEC staff in the last year issued new guidance on what types of proposals companies could exclude and in interpreting that guidance, sided with companies on more than a dozen resolutions.

Jackson was asked during the conference what the SEC is doing to address the financial risks of climate change and whether he thinks it is doing enough.

"I would say the answer must be no," Jackson said. "Because if we were doing enough in terms of mandating disclosure, providing the information you need, you would focus your resources and initiatives somewhere else."

The hard part of the question is exactly what the SEC should do to address disclosure in this area, Jackson said. He asserted that the agency needs a new framework, a new way of thinking, about what information counts as investor material. But, he added, doing so is not likely to be high on the agenda of the five-member commission, which is led by an independent and includes two Republicans.

One option could be that the SEC provides corporate boards with guidance on the issue of climate risks as it recently did on cybersecurity issues, Jackson said.