In March, under Acting Chairwoman Allison Herren Lee, who is now once again solely a commissioner, the SEC put out a request for comment on climate disclosures and received more than 550 unique responses during a comment period that ended in June.
"The comments were just all over the map," said Miranda Lindl O'Connell, a San Francisco-based partner with law firm Morgan, Lewis & Bockius LLP and co-leader of its ESG and sustainability working group, adding that there was a variety in the types of commenters and the suggestions they had for the SEC.
One thing her Morgan Lewis colleague, Carl A. Valenstein, a Boston-based partner and fellow co-leader of the ESG and sustainability working group, noticed was a frustration with the current "lack of standardization" when it comes to climate disclosures.
Mr. Gensler, in his July 28 speech, shared that frustration, too. "When disclosures remain voluntary, it can lead to a wide range of disclosures, often inconsistent (and) hard to compare with one another," Mr. Gensler said.
However, according to Mr. Valenstein, "It's one thing to say, 'We're going to mandate disclosure,' it's another to say, 'We're going to mandate disclosure using the following rating systems.' There's a huge dividing line on that because there are different rating systems just on environmental issues, depending on what industry you're in. I think companies want that flexibility by and large."
Ms. Peirce made a similar point in her July 20 speech and said that figuring out how to deal with ESG from a disclosure standpoint is complicated by the great and growing number of unrelated items it encompasses. "Many rating firms exist now because people do not share uniform views of what good ESG practices are for issuers or good ESG portfolios are for asset managers," she said.
Evan Williams, Washington-based director of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness, recognizes that the SEC is "likely going to move toward a prescriptive disclosure regime. But we want the SEC to maintain adequate flexibility, recognizing that different industries have different requirements, have different investor bases, have different circumstances that ought to be factored into this exercise, and a one-size-fits-all mandate isn't going to work for every industry, for every public company."
Mr. Valenstein said he'd be surprised if the SEC came out with a proposal that required the adoption of a particular rating system for every company, regardless of industry and size.