[author: Melissa Pfeuffer]

During the National Investor Relations Institute’s (NIRI) 2021 Virtual Conference, SEC Commissioner Elad Roisman spoke about the hot topic of ESG-related disclosure requirements.

The Commissioner noted that public companies are overwhelmed with the amount and the specificity of ESG data investors ask them to provide. Commissioner Roisman appreciated the call for standardized disclosures related to environmental, social, and governance matters. Yet, he seemed skeptical of how the SEC would approach construction of a set of ESG disclosure requirements. Doing this would “displace a good amount of private sector engagement.” Commissioner Roisman acknowledged SEC rule-writing is slow, and observed that there should be confidence in the process of crafting new disclosure requirements so that the requirements have long-lasting applicability, as reexamination does not happen often.

Additionally, while crafting ESG disclosure requirements, the Commissioner believes, although challenging, the SEC’s focus should be on “what information is material to an investment decision.” Commissioner Roisman noted that the SEC Staff consists mainly of experts in financial markets, further stating, “We do not have, for example, climate scientists… It is fair to question how our staff is equipped to determine which climate or environmental information…is material to an investment decision.”

In his concluding observations, the Commissioner raised concerns also about standard-setting: who would the SEC choose as the example to rely on and explain how its choice serves its intentions in establishing new ESG disclosure requirements? Although posing these questions and concerns, Commissioner Roisman said his mind is not ultimately made up on these issues and he is receptive to learning more.

Read the Commissioner’s full remarks here.

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