Making Sense of ESG with the SEC

To debate at present whether public corporation Environmental, Social, and Governance (ESG) reporting is important or necessary or whether it should be mandatory rather than voluntary is to engage with a past to which we cannot return. Our global climate crisis is real and intensifying, and for better or worse, the ESG reporting horses long ago left the gate in response. This article assesses and supports the United States Securities and Exchange Commission’s (SEC) proposal for mandatory climate-related reporting in SEC Release No. 33-11042 as a necessary step in the broader context of ESG reporting. The article asserts that the present-day, paramount issue with ESG reporting is not whether corporations should be required to report on ESG, as the reality shows that most corporations already do for self-serving purposes. It is rather, that the essential concern of accountability and its component parts of materiality and liability included in the SEC’s mandatory ESG reporting project must be carried through and refined. Thus, if the Commission’s Proposing Release ushers in a regime of yet imperfect but mandatory ESG reporting in the United States, it is the accountability mechanics component addressed in this article that calls out for further refinement