Evaluating Challenges To SEC's ESG Disclosure Proposal

Introduction

Many companies now publish sustainability reports. Their managers are voluntarily trying to meet investor and consumer demand for climate-related disclosures.

The U.S. Securities and Exchange Commission says it will propose new regulations mandating such disclosures from, at least, public companies in October.

But not everyone agrees that is a good idea. Some say the SEC lacks authority to adopt such rules.

We examine arguments against more mandatory SEC regulations.

Background

Since 2010, the SEC has provided interpretative guidance for public companies regarding how its existing disclosure requirements apply to climate change matters.¹

In May, President Joe Biden called for further action. In an executive order issued that month, the president announced a governmentwide strategy to address climate-related financial risks.²