Scott Beaudoin, March 2022
GreenBiz22 was a clear indication that professionals are ready to be back together, in person, and that ESG has never been more important than it is at this moment. Organizers of the event have been bringing together corporate executives, investors, environmental organizations and ESG consultants for decades, but this year’s February event in the desert of Scottsdale, AZ, during a pandemic was its largest attendance ever.
There are continuous parallels being drawn between the unforeseen risks of a pandemic and the climate crisis, with both negatively impacting the global economy. This has made many investors realize a greater need to accelerate investments and progress on businesses that prioritize ESG. As Joel Makower, chairman and co-founder of the GreenBiz Group rightly stated at this year’s event, ‘today, ESG remains the wild west,’ reiterating his belief that for all the salutary change it may be creating in financial circles, the ESG landscape remains treacherous and unforgiving.
I couldn’t help sense that corporate professionals I spoke with at the event are feeling more pressure than ever before – both external and internal, making me more convinced that perhaps companies do need a Chief ESG Officer to navigate the landscape and do it fast. Greening of business has definitely moved from the periphery of corporate functions to the core.
One breakout session at this year’s event that received much attention was ‘The SEC Homes in on ESG.’ Momentum is building for mandatory ESG disclosures in the U.S., with these disclosures being a particular focus in the Biden Administration, the U.S. Congress, and the U.S. Securities and Exchange Commission (SEC). While legislation on mandatory ESG disclosure continues to be considered in Congress, near-term action is expected to be taken by the SEC.
In March of 2021 the SEC Enforcement Division created a Climate and ESG Task Force to create an ambitious rule-making and enforcement agenda putting ESG disclosures under a microscope. This was a result of institutional investors pressure to push for improvement in what companies disclose when it comes to climate change, board diversity, human capital management and cybersecurity risk governance. Climate change will be a priority, as evidenced by the agency’s 2021 stand-alone comment letters on climate-related disclosures in SEC filings. A proposal on mandatory ESG-related disclosure rules is expected this year.
While the SEC’s proposed rules are still developing, it was clear to me at GreenBiz22 that many ESG practitioners were already voluntarily including ESG disclosures in their communications to key stakeholders. Whether ESG disclosure is ultimately mandated by the SEC, some shared best practices are clearly already in place.
- More CEO’s, in collaboration with boards are providing leadership on their company’s ESG strategy.
- Board committees are playing a greater role in oversight of certain matters and responsibilities relevant to ESG.
- Policies, procedures, and internal controls are firmly in place to confirm the accuracy and reliability of ESG data and metrics.
- ESG disclosures are being aligned across all mediums and channels of communication, including SEC filings, sustainability/financial reports, and the company’s website.
A lot will change in the next twelve months before another well-attended GreenBiz23 takes place. With the 2022 midterm elections looming in the U.S., will it be more progress or referendums on multiple fronts that we gather to discuss? Time will tell.