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Peirce Questions Push for Disclosures on Board Makeup, ESG Investing

In a speech to the Council of Institutional Investors SEC Commissioner Hester Peirce lauded recent industry efforts to engage with the SEC on proxy and disclosure reform, among other initiatives. Peirce however reserved criticism for other popular topics such as disclosures on ESG investing and corporate directors’ personal characteristics. “When the SEC is asked to concentrate on issues other than protecting investors, facilitating capital formation, and fostering fair, orderly, and efficient markets, our focus shifts away from our mission,” Peirce said. She noted the Council of Institutional Investors’ support of disclosures regarding corporate board members’ personal characteristics such as race, gender, ethnicity, religion, nationality, disability, sexual orientation, or cultural background. The SEC’s Division of Corporation Finance also recently released new compliance and disclosure guidance related to disclosures of director qualifications that includes these provisions. Peirce said she worries that the staff’s expectations “will work with other pressures to force reticent board members and nominees to divulge personal details they would prefer to keep private.”  On ESG, Peirce noted that the SEC did not sign on to a recent statement from The International Organization of Securities Commissions directing issuers contemplating whether ESG factors should be included in corporate disclosures, among other issues. Peirce, reinforcing that her opinion was not that of the entire Commission, said: “The U.S. securities laws already provide for material disclosures. Explicit consideration of ESG factors must therefore require something more than what is already contemplated by our laws and by our long-standing definition of ‘materiality.’” 

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