U.S. regulators may not be ready or willing to mandate that companies disclose ESG risks, but some institutional investors vow to continue pressing the issue.
An April 2 hearing held by the Senate Committee on Banking, Housing and Urban Affairs highlighted the opposing positions on whether the Securities and Exchange Commission should require a uniform approach to reporting.
Critics of the idea warn that the burden of new reporting could outweigh the benefits, or will further drive companies away from public markets, while others worry about undue influence by groups with social or political agendas.
The White House has also joined in the debate, including in an executive order April 10 aimed at spurring oil and gas pipelines a call for the Department of Labor to review whether retirement plans and proxy firms engaging with energy companies on ESG issues are compromising their ERISA fiduciary duty to maximize returns.
On the other side are institutional investors who say the current approach of getting the information company by company is inefficient.
"We need a bit more specific information presented in a standard format, so we can compare across companies. If it is done well, I really think it will be beneficial to corporations and investors because corporations are being asked by so many players in their own way. A well-founded set of standards could really ease the burden," said John Streur, president and CEO of Calvert Research and Management in Washington.
Washington policymakers and regulators are "honestly trying to learn about this issue, but I do think this is primarily an issue between investors and corporations" for now, Mr. Streur said. While some large companies are leading the way on voluntary ESG disclosure, "90% are still trying to learn," he added.
"As an industry, I think we are moving forward very well" in strengthening companies' ESG disclosure, which helps companies strengthen their operations, said Mr. Streur. "Where we have reached a tipping point is the number of large asset owners and asset managers who are active on this issue."