Investors Ask SEC for Better Sustainability Disclosure

In April, the SEC issued a concept release on disclosure reform, which invited feedback on a broad range of issues related to Regulation S-K, including the disclosure of sustainability information. A preliminary analysis of the comment letters confirms one thing we already know to be true: investors want better sustainability disclosure.


As of July 25, the SEC had received 26,391 comment letters. Of these responses, 16,302 were form letters asking the SEC to require U.S. corporations to disclose more details on foreign subsidiaries, and taxes they owe in the US. 9,862 were form letters calling for SEC to require companies to disclose “sustainability plans”, tax payments by country and political spending. Of the 227 original letters, 66% discussed sustainability disclosures. This is pretty remarkable, considering that only 3.2% of the Concept Release (11 of 341 pages) discussed sustainability disclosure.


This high level of response is yet another indication of growing investor interest in sustainability information. It’s a much different world than when the SEC last examined sustainability disclosure in the mid-1970s, when questions involving environmental disclosures received considerable attention from the Commission and the federal courts. At that time, the SEC rejected calls for increased requirements for such disclosures because of, among other things, insufficient investor interest. The percentage of holdings of “ethical investors” was estimated at “two thirds of one percent” of all U.S. stock and bond holdings.


Today, however, investor interest in sustainability disclosure is no longer dismissible (for more proof points, see SASB’s letter to the SEC). Of the 149 public comment letters that discussed sustainability, more than half where from investors and investor groups with an aggregate AUM of over $168T. 85% of sustainability-related letters call for improved disclosure of sustainability factors in SEC filings. And, 71% of these letters mention SASB as a solution, and 16% of these letters mention SASB as the preferred solution. Here are some highlights:


  • “We prefer an industry lens be applied to sustainability disclosure and point the Commission to work undertaken by the Sustainability Accounting Standards Board as an example in this regard.” (BMO Global Asset Management)
  • PCA recommends that the SEC reference SASB standards as a way for companies to comply with ESG disclosure requirement under U.S. securities law and that the SEC rely on SASB as a standard setter to keep SEC ESG disclosure requirements current as issues evolve over time.” (Pension Consulting Alliance)
  • “One such standard gaining increasing acceptance is the approach of the Sustainability Accounting Standards Board {SASB}. We believe this is an approach that the SEC’ should seriously consider as a standard.” (The MacArthur Foundation)
  • The SASB standards may offer comprehensive and useful insight into the materiality of environmental, social and governance information.” (The EPA)


SASB is grateful to everyone who took time to participate in the SEC public comment period.  This is a historic opportunity to make sustainability reporting more cost-effective for companies and decision-useful investors. The SEC has a public mandate to take this work forward—we remain interested to see how they choose to do so.