SEC Commissioner Kara Stein advocated for a broader range of standardized disclosure requirements, including as to environmental, social and governance ("ESG") information disclosure.
In a speech at the Council of Institutional Investors 2018 Fall Conference, Ms. Stein criticized the argument against ESG information disclosures that investors are already "overload[ed]" with information from public company disclosures. Ms. Stein stated that, in her five years at the SEC, she had "not heard this concern expressed by even one investor." Referencing a recent ESG information disclosure petition, Ms. Stein said that the SEC should concentrate on making public companies disclose information that investors ask for.
Ms. Stein argued that the SEC should focus on organizing and fairly presenting disclosure information rather than discussing alleged "information overload." Ms. Stein asserted that since public companies are already electing to provide more information to investors voluntarily, the SEC should address the lack of uniform standards and comparability between companies. According to Ms. Stein, non-GAAP (i.e., generally accepted accounting principles) metrics are voluntarily disclosed by 97 percent of S&P 500 Companies. However, the metrics are not standardized or uniform and, therefore, are less useful to investors.
In addition to mandating uniform disclosure information standards, Ms. Stein recommended that the SEC should empower independent auditors to determine whether public companies fairly present non-GAAP metrics and other information (such as key performance indicators) to investors.
Two professors of business law petitioned the SEC to require public companies to disclose environmental, social and governance information.
SEC Commissioner Hester M. Peirce advocated an approach to regulation in which the responsibility of determining the merit of a product is placed on the investor.