SEC Commissioner Caroline A. Crenshaw urged greater environmental, social and governance ("ESG") disclosure for both issuers and asset managers; asset managers should have the information they need in order to be responsive to investors, and investors should be able to understand how asset managers are approaching ESG risks.
In a podcast with the Security Traders Association, Ms. Crenshaw explained that, because investors consider ESG material to a company's financial performance and long-term value, the SEC should ensure that investors have access to information that is "decision-useful," meaning complete, comparable and reliable. She pointed to the recent election of Exxon's board and the recent vote by Duke Energy shareholders to require more detailed disclosures on political spending as examples of the importance of ESG to investors.
Ms. Crenshaw called for ESG disclosure for both issuers and asset managers, acknowledging that, currently, it is "very difficult for asset managers to get access to consistent, comparable and reliable information about issuers that helps inform the asset managers' ESG-related investment decisions."
On enforcement, Ms. Crenshaw explained that the SEC ESG taskforce will look at whether companies are complying with existing obligations to disclose ESG risk (see previous coverage here). Ms. Crenshaw shared that the questions that most interest her are:
whether companies are putting off disclosing materials associated with climate change; and
whether issuers, funds or advisers are engaging in greenwashing by claiming to employ ESG strategies, but failing to live up to such representations.
Ms. Crenshaw also shared her interest in the extent to which issuers are disclosing firm-wide employee retention and turnover levels, how the ability to telework due to COVID-19 has affected companies, and the implications on board diversity in publicly traded companies.
Headline on the front page of The Wall Street Journal on Tuesday, June 15, 2021: "Oil Hits Pandemic High on Bets Green Shift Will Crimp Supply."