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Commissioner Uyeda Urges Questioning Of ESG Trend Sustainability

In recent remarks to the 2022 Cato Summit on Financial Regulation, Securities and Exchange Commissioner Mark Uyeda noted the uncertainty of both costs and benefits of ESG investing.  With respect to costs, Commissioner Uyeda pointed out that the significant additional burdens from proposed climate change disclosure requirements (emphasis in original, footnotes omitted):

In its March 2022 proposal, the Commission estimated that the total existing external cost burden on companies to register their offerings on Form S-1 and file their annual reports on Form 10-K was a little more than $2 billion.  The Commission then estimated that the marginal increase from the proposed climate disclosures alone would nearly triple these costs to over $6.3 billion.  These estimates were based on the assumption that the cost for external legal advice was $400 per hour – an amount that has remained flat since 2006.  Recently, the SEC adjusted the assumed cost to $600 per hour – and even this revision may be too low.  Using this $600 assumption, the total estimated external costs quadruples to $8.4 billion.

In light of these costs, Commissioner Uyeda warns:

The uncertainty of benefits associated with ESG investing, combined with the certainty of costs for companies undertaking ESG activities, should motivate all market participants – whether public companies, investors, or asset managers – to question whether the ESG trend itself is sustainable over the long term. 

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 325
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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