CFA filed a comment letter with the Securities and Exchange Commission in which it applauded the agency “for finally taking steps toward mandating disclosures regarding climate change and other critically important environmental, social, and governance (“ESG”) issues. Expanding the information that companies are required to provide about ESG issues, and improving the quality of that information, has been a high and growing priority for investors of all types and sizes for several years,” the letter states. “Yet, while other countries have begun to take meaningful steps to respond to investor demand – and despite growing evidence regarding the threat issues such as climate change, racial injustice, and income inequality pose to the economy – the Commission has failed to act.”
The letter outlines evidence of investor demand for improved disclosures related to a range of ESG issues, including climate risks, broader environmental concerns, diversity and inclusions, and human capital management. It argues that improved disclosure in this area are not only well within the Commission’s authority, but imperative for it to fulfill its mission to protect investors, promote fair and orderly markets, and facilitate capital formation. And it outlines specific recommendations regarding the content and format of the disclosures, the best mechanism for updating them over time, and other aspects of the securities markets in need of repair to make the disclosures effective.