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Investors ask the SEC for more ESG information when companies resist



(Reuters) – Investor groups have asked the US Securities and Exchange Commission for more corporate information on climate change and other environmental, social and governance issues while business interests have rebounded, according to a Reuters review of correspondence published by the regulator.

The deadline for the public to comment to the SEC on the subject expired on Monday. Thousands of investors and advocates, from large asset managers to individual investors, as well as companies and trading groups made posts, which were available on the SEC website.

The SEC said last week that new rules on ESG disclosure could be proposed in October. Such a move would mark a major change under the new SEC President Gary Gensler, who was nominated by President Joe Biden as part of a broader effort to tackle climate change and social injustice.

"The current state of climate change detection does not meet our needs," Ceres, a Boston-based coalition of more than 500 investors, environmental organizations and public interest groups, said in one of the letters.

The group called on the SEC to take a broad view of the effects of climate change, including the implications for human rights and the relationship between climate, water, food and forests.

Companies and lobby groups, including trading groups for petroleum producers and banks, on the other hand, called on the SEC to give them broad discretion in their ESG tasks. They argued that the one-size-fits-all requirements do not work in practice.

The companies themselves are best placed to assess what information is most important or most important to their investors, they said.

"Disclosure mandates should not be prescriptive, but rather should remain flexible so that disclosures respond to changes in facts, circumstances, risks and other developments," wrote Tom Quaadman, Deputy Chief Executive Officer of the US Chamber of Commerce.

The United States has no specific rules for climate change. It has also not agreed on definitions of key terms as sustainable and has no uniform standards for measuring companies' environmental objectives or quantifying and reporting climate risks, although many companies release ESG under a range of voluntary standards.

The public comments will help inform the SEC's regulatory framework, which still needs to undergo a formal deliberation process.

The stakes are high. More Wall Street fund managers are putting the weight behind investors' demands on companies in ESG issues. They increase the heat by publishing how and why they voted, as billions of dollars flow every day to funds focused on sustainable investment.

In the letters that Reuters reviewed, investors claimed public information about how a company's management attracts, develops. and retaining staff ̵

1; also known as their human capital – can highlight its long-term future prospects. They also want to be able to hold companies accountable for how they treat their employees.

"Stronger reporting of human capital, especially quantitative metrics rather than just qualitative narrative, is associated with higher returns on invested talent and higher operating margins and better risk-adjusted returns," said Eleanor Eagan, research director at the Center for Economic and Policy Research & # 39; s Revolving Door Project, a non-profit organization in Washington dedicated to educating investors.

Other investor-focused groups, such as the Board of Sustainability Accounting and the Principles of Responsible Investment, also said the SEC needs robust, consistent information to help investors measure human capital metrics across sectors.

"For the SEC to have this right, investors must be very clear about what they are interested in and what they are not," said Aniket Shah, head of ESG and sustainability research at investment bank Jefferies Financial Group Inc.


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