In June, SEC’s Chairman Christopher Cox lauched the “21st Century Disclosure Initiative.” The Initiative goal is to review the existing disclosure system, its objectives and to try to propose measures in order to improve the disclosure system with modern technology and practices.
The SEC asked for public comment and the deadline for submitting them was October, 22.
Ceres has published the letter that fourteen of the nation’s largest institutional investors have sent to SEC in which they urge the Securities Exchange Commission to consider environmental, social and governance (ESG) issues as “a key element of the 21st Century Disclosure Initiative”.
The investors consider that the SEC should include “consistent and comparable” standards for disclosure of climate risk information in its disclosure system. Climate risk information is increasingly used in order to make investment decisions but most of the data is to be found in corporate voluntary reports. The information provided by corporation in these reports is not considered sufficient by investors in order to assess corporation’s financial viability.
The investors consider that environmental, social and governance (ESG) issues should find their place in the SEC disclosure system. At the moment this type of information can be found in corporate responsibility reports. The investors propose that the GRI should serve as an example for a new disclosure system.
It has to be said that this debate is not at all new in the countries of the European Union. Actually, regulations regarding disclosure of non-financial information have been adopted at both European level and national level. The U.S. investors use the examples of France, U.K. and Sweden in order to justify the need for a reform of the SEC disclosure system.
Actually, it will be interesting to see how far the SEC will go in its reform. By the end of 2008, the Initiative will produce a report that will present the modernized disclosure system.
