- Climate change, board diversity, human capital metrics, and reforms to 10b5-1 plans are all listed for Oct. 2021.
- Proxy advisory rules, shareholder proposal eligibility, and clawbacks are slated for April 2022.
- It is not clear how that will affect the proxy advisory rules that are currently set to take effect in Dec. 2021.
A
recent article from Davis Polk & Wardwell LLP reviews and summarizes general patterns in the comments, including:
- Legality of new climate disclosure mandates
- A minority (7 of 30) of comments argued that either the SEC does not have the authority to mandate climate disclosures or that compliance costs are excessive and will not survive the required cost/benefit analysis.
- Which metrics/information should be disclosed?
- 13 of 30 comments expressed a preference for industry-specific standards. Including some overlap, 18 of 30 also indicated that the SEC should draw on existing frameworks such as SASB or TCFD.
- Standards used to facilitate comparisons
- Commenters were split on whether only quantifiable data should be disclosed vs. Scope 3 greenhouse gas emissions data (emissions from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain such as a financial company making loans to emitting entities).
- Potential liability included for new disclosures
- A majority of comments that touched on the issue of liability recommended providing a safe harbor for disclosures. Slightly less popular were comments encouraging the SEC to require furnished data (such as on a company website) rather than requiring data filed with the SEC.
- Should broader ESG disclosures be included?
- A plurality of commenters indicated that climate disclosures should be part of a larger effort on ESG disclosures while additional comments indicated that climate disclosures should take priority.
Overall, it appears that most commenters from high-profile institutions used the comment period to highlight concerns or details that the SEC may not have initially recognized. Based on the schedule noted above, the Center is anticipating the SEC will publish a proposed rule in October of this year.
