Investors Could Soon See Sustainability Data From More Companies
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What is the main topic discussed in this episode?
Here's your Money Briefing for Thursday, January 21st. I'm J.R. Whalen for The Wall Street Journal. In recent years, companies have been disclosing more about their efforts in the area of environmental, social, and corporate governance, also known as ESG. As a new administration takes office, those kinds of sustainability measures could become more available to individual investors.
The Securities and Exchange Commission may very well end up requiring companies to disclose information about ESG risks, but it's also possible that we'll see ESG factor into decisions made by the Department of Labor and other agencies as well.
So what's on the horizon for investors who want to add ESG-focused companies to their portfolio? Our reporter Emily Glazer will have some answers after the break.
President Biden has made it clear the environment will be a focus of his administration. Among the first actions in office were rejoining the Paris Climate Accords and revoking a key permit for the proposed Keystone XL oil pipeline. That focus is likely to affect corporate America and the push for companies to boost their initiatives around environmental, social, and corporate governance, also known as ESG. For a look at how a greater emphasis on these kinds of sustainability metrics could affect boardrooms and individual investors,
What does ESG stand for and which issues does it cover?
We're joined now by our reporter, Emily Glazer. She's been looking into this. Emily, thanks for being with us.
Thank you for having me.
So we've heard a lot about ESG policies, but can you break this down for us? What exactly does ESG encompass?
Sure. ESG is going to be a buzz acronym that we're going to be hearing a lot more. It stands for environmental, social and governance. And that could hit across so many different areas, whether, you know, climate change, diversity and inclusion, corporate governance, you name it. It really factors into a bunch of companies across sectors, both large and small.
So how is the Biden administration expected to approach companies and their ESG policies?
A number of folks are expecting the Biden administration to really tackle ESG, and it could come from a couple different places. The Securities and Exchange Commission may very well end up requiring companies to disclose information about ESG risks, but it's also possible that we'll see ESG factor into decisions made by the Department of Labor and other agencies as well.
How might the Biden administration influence corporate ESG disclosures?
Well, you know, requirements on companies are one thing, but what the market wants is another. We've seen calls for greater transparency. So how has that affected companies adopting ESG policies and initiatives?
Well, we've seen companies across sectors, but especially in financial services, oil and gas, the electric industry and elsewhere, increasingly put out voluntary sustainability reports. And a lot of these will often include ESG factors, whether it has, you know, efforts on carbon emissions or diversity and inclusion or, you even just ways that companies are reducing their own carbon footprints. But this is all voluntary, and the companies are choosing what statistics to include, what to include at all, and measuring it in their own ways. And that's quite different than a requirement from the SEC that would make this information material and have more consistency in what companies need to disclose and how they disclose it and how they measure it.
Okay, so now let's focus on individual investors. If someone wants to invest in companies that emphasize ESG, where do they go to learn more, you know, to find a more complete set of information?
What differences exist between voluntary sustainability reports and potential SEC requirements?
Well, ESG in terms of investing has been around for many years and it got more popular several years ago. So this is nothing too new on the investor front. Some of the really big firms like BlackRock and Vanguard for years have been developing new products and focusing more on ESG in their investing. But we're also seeing it
How are companies and trade groups lobbying for sector-specific ESG rules?
you know, from big companies too because they're realizing their institutional investors may not want to invest in them if they have these types of risks because it can hugely impact, you know, company reputation, company earnings.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–1:29
2
What does ESG stand for and which issues does it cover?
1:29–2:37
3
How might the Biden administration influence corporate ESG disclosures?
2:37–3:52
4
What differences exist between voluntary sustainability reports and potential SEC requirements?
3:52–4:15
5
How are companies and trade groups lobbying for sector-specific ESG rules?
4:15–5:52
6
Where can individual investors find ESG-focused investment products and funds?
5:52–7:02
7
How is investor demand and money flow affecting the growth of ESG ETFs and products?
7:02–7:23
Speakers
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