Some Do’s and Don’t’s for Voluntary ESG Reporting and Disclosures

Some Do’s and Don’t’s for Voluntary ESG Reporting and Disclosures

June 2, 2020, Covington Alert

Increased attention has recently been given by both investors and the Securities and Exchange Commission (SEC) to promoting clear and comparable disclosures of environmental, social and governance (ESG) factors. On May 21, the SEC's Investor Advisory Committee (Committee) debated and endorsed recommendations of the Investor as Owner Subcommittee that the SEC begin in earnest an effort to update the public disclosure reporting framework for companies to include material, decision-useful ESG factors.

The Committee discussion observed that many investors regard certain ESG information in voluntary reports to be material to their voting and investment decisions and that voluntary ESG reports expose companies to anti-fraud litigation risks for misleading disclosures. Considerations such as these highlight the importance for companies to take great care in formulating their voluntary ESG reports. This alert seeks to assist companies with this task.