April 19, 2021

Volume XI, Number 109

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April 16, 2021

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U.S. Climate Finance Summit: Regulators Call for ESG Disclosures; Investors Demand Them

On February 18, 2021, the Institute of International Finance (“IFF”) hosted the U.S. Climate Finance Summit, at which both John Coates, Acting Director of the SEC’s Division of Corporation Finance, and Federal Reserve Governor Lael Brainard made statements in favor of companies providing fulsome ESG disclosures.  These pronouncements underscore the Summit’s larger goal of supporting a “pro-growth, pro-markets transition to a sustainable, low-carbon economy.” 

Acting Director Coates said that the SEC “should help lead” the creation of a disclosure system for ESG issues for corporations.  He noted that rigid, specific disclosures aren’t necessarily the answer as they can easily become out-of-date.  Nevertheless, Coates recognized that companies are already reacting to increasing shareholder interest for ESG information by issuing various sustainability reports organized by private groups.  Indeed, he commented that, “to some extent what has traditionally been voluntary is becoming less voluntary, not through law but because of investor demand.”

Governor Brainard also acknowledged that “[c]urrent voluntary disclosure practices are an important first step,” but are “prone to variable quality, incompleteness, and a lack of actionable data.”  She endorsed ultimately “moving toward standardized, reliable, and mandatory disclosures” related to climate risks.

Accompanying the Climate Finance Summit, IIF and 10 other financial services trade associations published “Principles for a U.S. Transition to a Sustainable Low-Carbon Economy,” a set of mutually-agreed-to climate finance principles, which will no doubt serve instructive to companies moving forward in the ESG space.

Importantly, only a month into the Biden administration, regulatory officials are publicly calling for heightened ESG disclosures:  just last week, Acting SEC Chair Allison Herren Lee directed the Division of Corporate Finance to enhance its focus on ESG disclosures in public company filings.  Still, as evidenced from Coates’ and Brainard’s statements, the real impetus for such disclosures may come from investors, as opposed to the regulators themselves.

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© 2021 Proskauer Rose LLP. National Law Review, Volume XI, Number 61
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About this Author

Erica T. Jones Associate Washington, DC Litigation Securities Litigation
Associate

Erica Jones is a litigation associate with a particular focus on emerging legal issues relating to cryptocurrency and changing technologies, and securities litigation. Most recently, Erica has represented a publicly traded company and their affiliates in two putative class action RICO cases, where she drafted motions and arguments to oppose class certification.

Erica earned her J.D. from Harvard Law School, where she received the Dean’s Scholar Prize in “Legal Profession - The New Market for Personal Legal Services: Ethical and Professional Challenges.”  She also served as a...

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