Interesting debate yesterday before the US Senate Banking Committee on the topic of expanding disclosures of US companies to include environmental, social and governance data besides just financial disclosures
The SEC itself acknowledged widespread investor dissatisfaction with the quality of mandated sustainability disclosures in an April 2016 Concept Release on Disclosure Effectiveness. 10 That said, there is no indication that the SEC intends to pursue regulatory changes relating to the so-called “mandatory” sustainability disclosures that must be made in SEC-filed documents, thus leaving the field open for “private ordering” to continue – in the form of voluntary corporate sustainability disclosures posted on company websites or otherwise appearing outside the four corners of SEC filings.”
An example of the importance of managing non-financial risk through disclosure is what happened to United Airlines last week… We saw the reputation of United Airlines destroyed in just the wink of an eye… less than 30 seconds
Importance of Diversity and Inclusion Having an active diversity and inclusion strategy and disclosing these metrics included in the financial report also builds the business case to attract an increasing number of investors looking for this additional data disclosure. The US House of Representatives’ Financial Services Committee just created a Diversity and Inclusion subcommittee (the first in the nation’s history) to examine this important human capital topic and to understand what companies are disclosing this data, why and how the capital markets and government can support better disclosure
This also includes human capital data disclosure by companies including gender pay and pay ratio data including composition of boards of directors.
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People today have less trust in their political and social institutions than they have in years; many expect business leaders to fill the gap and human capital disclosures is an important link in connecting individuals to society through their working environment.
Watch out United States EDGAR Online – the European Union is building a “next generation” -- “EDGAR-LIKE” corporate disclosure platform to be used by 28 EU member states for global investors that will be built upon BLOCKCHAIN and global financial and non-financial data access standards like eXtensible Business Reporting Language ( XBRL ) to expedite investments from global investors
The US Securities and Exchange Commission has voted today to move forward in mandating the use of Inline XBRL for US public company financial statement disclosure. See below story blogged on December 28, 2016 in which we discussed the possibility of the US SEC taking this action and mandating the use of Inline XBRL in the United States
This additional non-financial disclosure will help to address material risks associated with these topics that are showing greater and greater interest from the investment/pension community through impact investing/responsible investing
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