SEC Chief Defends Plan for ESG Disclosure Despite Republican Opposition
Evie Liu
Sept. 15, 2021
Minute 41:00 the conversation starts with an interesting exchange between Gary Gensler and Senator John Kennedy who suggests Gensler is acting as a “daddy” to the American people.
Summary
The article is reporting on a recent testimony made by SEC Chairman Gary Gensler about a range of topics, mostly those that present risks to the American financial system. Of note, he discusses ESG and climate risks, in addition to crypto, investment fees (no-fee trading), and financial access.
Basically, Gensler is suggesting that corporations should disclose information that investors demand and that will aid in their investment decisions. Gensler cites the growing number of ESG funds and popularity of ESG investing. Gensler argues, without disclosures, there is no way for investors to make informed financial decisions.
The author does a good job of noting Gensler’s reactionary policy making. The author also cites Tariq Fancy’s commentary on ESG. Most importantly, the author states that it is the responsibility of the SEC to determine which information “companies must disclose, and what they don’t have to.”
So What?
It is interesting the think of the regulatory environment for ESG mandatory disclosures. It seems the SEC is not far away from establishing these disclosures. The thorn is that it is difficult to choose what companies should disclose because companies are so diverse; and giving companies the freedom to disclose what they want will not provide the unbiased information that investors want. On the other side, represented by Senator John Kennedy, people don’t want ethics involved in finance, so the information must be absolutely financially material.