The SEC should not give in to demands for increased environmental, social and governance disclosures, the U.S. Chamber Center for Capital Markets Competitiveness said in a report released Tuesday.
“[We’re not saying] that ESG information is never material to evaluating and understanding a company and its business. What we are saying is that public companies should not be mandated under federal securities laws to disclose information that is not material to a reasonable investor,” the report said.
The business advocacy group noted numerous public companies are voluntarily disclosing ESG information in press releases, websites, conferences and social media postings.
Some interest groups are seeking far-reaching ESG disclosures for a wide range of companies on board make up, political spending, labor practices, greenhouse gas emissions and supply-chain management, while other groups are more focused seeking specific disclosures in specific industries for specific investors, the study said.
“[With many immaterial ESG details], the value of the decision-useful information is diluted or obscured by being associated with disclosures in which most investors have little or no interest,” the report concluded.
Vanguard, however, says it does have an interest because ESG issues can impact long-term performance, the firm’s funds treasurer, Glenn Booraem, said at a chamber seminar where the report was released.
“Sustainability is not an ideology, it’s an economic mandate for us,” Booraem said.
While Vanguard is not supporting ESG shareholder proposals at annual meetings, he noted the fund giant is actively engaged with boards and managements to promote ESG disclosure and operating practices to promote the long-term health of the companies it holds.
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He added the importance of particular ESG factors can vary widely between companies and industries.
Tom Quaadman, Chamber Center for Capital Markets Competitiveness executive vice president, said after the session that shareholders would be better off if disclosure requirementes were reduced so CEOs could spend less time dealing with gadfly investors and more time running their companies.