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Volume XI, Number 107

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Domestic and International Securities Regulators Focus on Sustainability Standards

Recent statements from domestic and international securities regulators suggest that development of consistent environmental disclosure standards may soon be forthcoming, with a nearer-term emphasis on sustainability goals and methodologies for addressing climate change.

On Feb. 24, Allison Herren Lee, acting chair of the U.S. Securities and Exchange Commission (SEC), issued a statement directing the SEC’s Division of Corporation Finance to “enhance its focus on climate-related disclosure in public company filings.” Meanwhile, on the same day, the International Organization of Securities Commissions (IOSCO), posted a memorandum calling for the formation of a sustainability standards board (SSB) to encourage “globally consistent [sustainability] standards,” promote “comparable metrics and narratives,” and coordinate “across approaches.”

While it is too soon to tell whether, and how soon, any of these efforts may result in the development of enforceable disclosure standards, agreement on methodologies and reporting formats marks an important first step toward that end. So, too, it is difficult to say which of the varying disclosure methods and formats will prevail.

Nevertheless, the SEC and IOSCO announcements are consistent with recent polling finding that interest in ESG ratings—that is, organizational performance on Environmental, Social, and Governance measures—has risen in the financial community against the backdrop of the COVID-19 pandemic. While interest in ESG is driven by multiple concerns, governments and the public are increasingly recognizing the link between climate change mitigation, habitat preservation, and environmental protection on the one hand and prevention of future pandemics on the other.

While the precise origins of SARS-CoV-2, the virus that causes COVID-19, remain unknown, genomic analyses increasingly point to an animal source. As climate change and other factors drive humans to encroach on zoonotic reservoirs of disease— and animals to migrate to urban centers— policy makers continue to look for ways to mitigate the threat. Enforceable and consistent ESG ratings may be one of the first in a series of tools they employ.

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©2021 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XI, Number 57
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About this Author

Bernadette Rappold, Greenberg Traurig Law Firm, Washington DC, Environmental and Energy Law Attorney
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Bernadette M. Rappold focuses her practice on federal and state regulatory issues related to energy and the environment. Bernadette has substantial litigation experience and advises clients on regulatory compliance as well as the environmental, safety and health aspects of numerous business and real estate transactions, including water, air and chemical hazards. Bernadette offers clients perspective gained through years of service at the Environmental Protection Agency. While serving as a director of the Special Litigation and Projects Division in the Office of Civil...

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