Yesterday, we wrote about the potential impact of the nomination of so-called “Money Cop” Gary Gensler to chair the U.S. Securities and Exchange Commission (SEC). Well, now it appears that Gensler will have a new sheriff on staff to help prioritize Environmental, Social and Governance (ESG) issues across the agency. On Monday, Acting SEC Chair Allison Herren Lee—herself a proponent of “uniform, consistent, and reliable” ESG disclosure—announced that Satyam Khanna will serve as the SEC’s Senior Policy Advisor for Climate and ESG. Currently housed in Lee’s office, Khanna will advise the SEC on ESG issues and “advance related new initiatives across its offices and divisions.”
We expect Khanna to work closely with Gensler, Lee and others throughout the SEC to implement President Biden’s campaign promise to require companies to disclose climate risks and greenhouse gas emissions. Indeed, Khanna served previously on the Investor-as-Owner Subcommittee of the SEC’s Investor Advisory Committee, which in May 2020 recommended that the SEC update issuer reporting requirements to include “material, decision-useful, comparable and consistent information” related to ESG factors. That May 2020 recommendation also urged the SEC to “take control of ESG disclosure . . . before other jurisdictions impose disclosure regimes on US Issuers and investors alike.” While it remains to be seen how the SEC will regulate investors or if the SEC will take steps to adopt some form of a universal ESG reporting framework for U.S. issuers—like the one the World Economic Forum published in September 2020—Khanna’s experience and his new influential role indicate that these are well within the realm of possibility.