The SEC's
Spring 2021 Regulatory Agenda includes rules on human capital metrics and diversity and inclusion, reflecting the Biden administration's priorities.
Newly added agenda items reflect the SEC’s recent focus on prioritizing climate risk disclosures, human capital metrics, and diversity and inclusion. Mandating climate change disclosures and expanding existing human capital management disclosures were prominently featured. SEC Chairman Gensler recently highlighted in a speech that he has asked SEC staff to consider disclosures on “workforce turnover, skills and development training, compensation, benefits, workforce demographics including diversity, and health and safety.”
The SEC plans to revisit recently completed rules from the previous administration, even though rules that have not become fully effective. In particular, the agenda includes reopening shareholder proposal eligibility requirements, proxy advisory regulations (which will not be effective until December 2021) as well as new reforms to 10b5-1 plans, which were not previously considered.
Several long-standing items were moved onto the current agenda from the long-term agenda, including Dodd-Frank items such as clawbacks, financial institution incentive-based compensation, and pay versus performance disclosures. Given the extended period since the rules were proposed and significant changes in the market, HR Policy's Center On Executive Compensation is encouraging the SEC to resubmit these rules with a current cost benefit analysis. The current agenda also includes potential rules regarding board diversity disclosures.
Outlook: The SEC is not considering these new rules in isolation. President Biden hosted a meeting of his financial regulators to “discuss the state of the country’s financial institutions and issues such as climate change and inclusion.”
