SEC Commissioner Roisman’s ESG Speech

As part of the SEC’s Asset Management Advisory committee meeting today (here are the ESG subcommittee’s recommendations), SEC Commissioner Roisman just delivered this speech indicating you can be pro-ESG but leery about the SEC’s role in mandating ESG disclosure at the same time. Here is an excerpt:

It is entirely reasonable for a person to feel that climate change deserves immediate attention from lawmakers and still question whether the SEC mandating new disclosures from U.S. public companies is an appropriate step for the agency.  In this forum, I feel confident that we all recognize the fundamental questions here are about the SEC’s authority as a regulator and whether this agency’s intervention is appropriate to address the problems people have identified in our markets. 

This is an entirely healthy and necessary conversation, and it will be critical for us to have the full spectrum of market participants engaged.  If the only people who feel safe to comment are those who want the agency to join the fight against climate change and those whose business models would benefit from new regulation, we will miss hearing from those voices who can alert us to the hidden costs and unintended consequences of our actions.

I’m a little puzzled about the “if the only people who feel safe to comment” part of the speech. The SEC Commissioners and staff meet behind closed doors on rule proposals all the time. It’s true a note to the file gets posted on the SEC’s site that a meeting has transpired – but that note is perfunctory. There are no details.

So I’m not quite sure what the Commissioner is driving at – perhaps he’s predicting a heavy ratio of comments in favor of mandated ESG disclosure and he’s looking for a way to claim that’s not how people really feel. It’s not like SEC rulemaking a “majority vote” kind of thing anyway – the comments are helpful to inform decision-making but the agency isn’t bound by them.

By the way, Commissioner Hester Peirce also delivered short remarks, which ended with a musing on ESG and whether we need anything beyond a “materiality” standard if there aren’t ESG issues that apply across the board to all industries…