![]() ![]() However, the broader the issue set gets, the more difficult for the SEC to prescribe precise ESG rules.ĮSG’s lack of a coherent unifying principle plays out in interesting ways. As more and more issuers and asset managers are grasping for the ESG label, they likely will press to expand the number of topics further to make it easier for them to justify calling themselves ESG. ESG readily expands, though, to include whatever the speaker or the news media are focused on at the moment. Some of what we are excitedly calling ESG, of course, is simply the same old stuff on which companies have been reporting in accordance with our existing principles-based, materiality-oriented regulatory framework. Some issues are clearly ESG, such as carbon emissions, employee turnover, and dual class shares, but many other issues are not ESG in the eye of every beholder. Thesis 1: ESG as a category of topics is ill-suited, and perhaps inherently antithetical, to the establishment of clear boundaries and internal cohesion. I will lay these theses out without much sugar-coating precisely to spark a textured conversation about the complexities and consequences of a potential ESG rulemaking. Vigorous debate is going to be essential to any work that we do in this area, and to that end, I want to present ten theses for your consideration and our discussion this afternoon. Although it was not a Commission request, I have learned much from these thoughtful comments as I contemplate the SEC’s role in ESG disclosures. So, in addition to making my way through swarms of cicadas, this summer I have been wading through the many comment letters we received in response to an Ides of March request for comment on climate change and other ESG disclosures by then Acting Chair, Allison Herren Lee. Before I go there, however, I better give my standard disclaimer, which is that the views I represent are my own views and not necessarily those of the SEC or my fellow Commissioners.įront and center on our current regulatory agenda is whether and how we will move toward a more prescriptive ESG disclosure framework. Any ESG rulemaking will have to confront these difficult realities. The natural desire for ESG certainty, however, runs into the many real-life uncertainties and complications that characterize the overflowing ESG bucket. People want hard data to allow apples to apples comparisons. This tendency is evident in another phenomenon of this summer season, the loud calls for environmental, social, and governance (“ESG”) disclosures to facilitate the measurement and comparison of issuers and investment products. Especially when something is important to us, even when we cannot easily categorize, measure, and identify what is coming, we nevertheless try. People like predictable and measurable things-things that we can quantify, standardize, and compare with one another. On their second time through, though, he “had more sense than to endeavor to destroy them, knowing that they was not so pernicious to the fruit of the Earth as I did imagine they would be.” He had learned their patterns and was able to measure their schedule and their activity. He feared when meeting them for the first time at 17 that they would devastate the crops, so he tried to kill as many as possible. Banneker could be quite sure cicadas would emerge when he was 68 as they had done when he was 17, 34, and 51. Ĭicadas arrive on schedule and behave with a comfortable predictability. As eighteenth century farmer and self-taught naturalist Benjamin Banneker, having observed three appearances of cicadas, wrote:į their lives are Short they are merry, they begin to Sing or make a noise from the first they come out of Earth till they die, the hindermost part rots off, and it does not appear to be any pain to them for they still continue on Singing till they die. Every seventeen years the beady-eyed cicadas emerge from underground-a natural wonder, perhaps therefore to be forgiven for their uncouth habits and off-putting appearance. The dull hum of their song permeated the solitude of an evening stroll, along with the disconcerting crunch as pedestrian attempts to avoid squashing the creatures inevitably failed. This summer was the summer of the cicadas. ![]() Thank you, Aaron, for that introduction. ![]()
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