Full Title: The SEC’s Time To Act: A New Strategy for Advancing U.S. Corporate and Financial Sector Climate Disclosures
Author(s): Alexandra Thornton, Andy Green
Publisher(s): Center for American Progress
Publication Date: February 19, 2021
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In 2018, the Center for American Progress proposed an ESG action approach that called for the SEC to set certain line items for all public companies, set additional items via sectoral guidance, and look to private “materiality” standard-setters such as the Sustainability Accounting Standards Board to help companies flesh out their management discussion and analysis (MD&A)—where, unlike the other fact-based disclosure items, the disclosure seeks to enable investors to “see through the eyes of management” in how they evaluate risks and opportunities on an ongoing and forward-looking basis. The proposed framework also sets out the importance of accountability and enforcement, including by pointing to the importance of auditing and assurance, SEC staff comments on filings, shareholder proposal and voting rights, and enforcement actions.
This analysis builds on the work of the 2018 report, acknowledges the improvements and gaps in frameworks and standard-setting since then, and proposes a strategy for moving forward on climate disclosures. In addition, follow-up papers will address other important ESG disclosures, such as workforce issues, tax transparency, competition, and more.
The strategy advanced in this report shows how federal regulators can solve problems with the current state of climate disclosures and identifies appropriate next steps to ensure corporate transparency and accountability on climate-related risks for the benefit of investors and the public.