The Financial Economists Roundtable (FER), a group of senior financial economists formed in 1993 with significant contributions to economic theory, shared views on future requirements for disclosure on factors of sustainability that the Securities and Exchange Commission is preparing to introduce in the United States.
According to FER, regulators should not force companies to disclose data on the impact on society and the environment, and not to expand coverage to the entire value chain.
How then to limit the disclosure of ‘permanent’ data? According to financial economists, it is only the financial aspects of the business, perhaps even just the cash flows that are influenced by ESG factors. If the SEC decides to go beyond these limits and force organizations to disclose their impact on society, environment and climate, it will cause, in FER’s view, regulatory overreach and will only harm the organizations themselves.
Experts recommend not succumbing to pressure from supporters of mandatory ESG disclosures, and Congress should not give the Securities and Exchange Commission its consent to put them into practice.