This spring, the Securities and Exchange Commission (SEC) published a concept release discussing and seeking public comment on modernizing certain business and financial disclosure requirements in Regulation S-K. Regulation S-K is the regulation prescribed under the US Securities Act of 1933 that lays out reporting requirements for various SEC filings used by public companies.
Sixteen pages of the concept release are devoted to soliciting feedback on the Commission’s existing sustainability disclosure requirements, which are currently quite limited. The growing shareholder demand for corporate environmental, social and governance (ESG) performance indicators makes this section of the release especially timely and necessary. This is a rare window of opportunity to press the Commission to make sorely needed improvements to corporate reporting on sustainability-related issues affecting companies’ bottom lines, as well as their sustainability impacts on society and the environment.
Our comment letter states, “Despite the availability of general and specific [sustainability] reporting frameworks, many developed with extensive stakeholder consultation, because this reporting is voluntary, it is frequently impossible to construct a consistent, apples-to-apples comparison of corporate performance even on issues whose materiality is widely agreed-upon, such as climate and energy concerns or workplace diversity….Mandatory reporting requirements would transform this situation.” It argues for more specific requirements regarding corporate political contributions, taxes, climate change and other areas.
Tags: Regulation S-K, SEC, Securities and Exchange Commission