In February 2021, Securities and Exchange Commission (SEC) Acting Chair Allison Herren Lee directed the Division of Corporation Finance to focus on climate-related disclosures and use their insights to begin updating the SEC’s 2010 guidance, and the SEC has recently closed the comment period on potential climate actions in which it specifically asked whether the SEC should focus any future disclosure regulations solely on climate or whether it should consider Environmental, Social, and Governance (ESG) factors more broadly.
The Biden administration continues to consistently prioritize environmental justice concerns. The Environmental Protection Agency defines “environmental justice” as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” The “social” aspect of ESG broadly refers to a firm’s effects on its stakeholders, such as consumers, employees, suppliers, contractors, and the local and broader community. Many in the regulated community are now questioning how to reconcile these two important priorities in the context of corporate planning, disclosures, and community outreach. We provide a few considerations and actions that we believe are important: