Push-Pull: Discourse In The ESG Rulemaking Landscape

Recent remarks from two SEC Commissioners illustrate the broader divide about environmental, social and governance (ESG)-related disclosures and the resulting compliance costs public companies and regulated entities could face.

On Oct. 17, 2022, SEC Commissioner Jaime Lizárraga spoke at the 2022 Future of ESG Data Conference. Lizárraga focused on three rulemaking concerns: 1) climate risk disclosures by issuers; 2) enhanced ESG disclosures by funds and investment advisors; and 3) ESG-related fund names. Lizárraga reminded the audience that "[i]t's important to understand that a company's greenhouse gas emissions ... is a widely-used metric by investors." He also pointed to a recent finding that sustainable and impact investing by money managers grew from $178 billion in 2005 to almost $17 trillion in 2020. As such, these proposals are meant to "ensur[e] investors receive the information they need to make the most informed investment decisions." But at what cost?