SEC Commissioner Uyeda Criticizes Agency's ESG Rule Proposals and Process
SEC Commissioner Mark T. Uyeda criticized the SEC's proposal to incorporate ESG factors into rulemaking, describing the proposals as "staggering in their complexity and reach."
Mr. Uyeda asserted that ESG is, for practical purposes, an undefined term comprising different subunits that cannot be meaningfully aggregated. In light of this ambiguity, Mr. Uyeda argued that any information production by issuers would be meaningless. As an example of the unworkability of any ESG standard, he argued that there is no objective way to aggregate the ESG bona fides of a company that produces green technology but may also be abusive to its employees. Mr. Uyeda warned that because ESG is an amalgam of what may be considered politically attractive or desirable, its definition will fluctuate with the politics of the day.
Mr. Uyeda also questioned whether ESG disclosures were "material" as the concept is used in securities laws, where the emphasis is on financial materiality.
Mr. Uyeda attributed the large volume of comments in response to the SEC's ESG-related proposals to the overall vagueness and significant complexity of such proposals.
Mr. Uyeda raised concerns with the speed and complexity of the entirety of the SEC regulatory agenda, stating that at this time "we should not overwhelm firms with significant and costly new regulations."
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