Buy, Sell or Hold – Important Considerations for Issuer Disclosure and Omissions as ESG Reporting Becomes a More Universal Practice
This communication is a follow up to the recent DFIN Solutions webinar “Navigating the Corporate ESG Journey: Strategies & Lessons Learned Featuring FIS Global, IR Magazine’s 2020 Best ESG Reporting Award Winner.
Over the last few months the topic of “materiality’” in disclosures has been the subject in several SEC leadership speeches. In March, then acting SEC Chair Commissioner Allison Herren Lee said she was grateful for the opportunity “to reflect on the enhanced focus the SEC has brought to climate and ESG” and on the significant work that remains. Lee indicated the Commission will utilize a much broader definition of materiality over the course of the next term.
Considering the SEC focus on materiality, it’s no wonder the question many boards and C-Suites are discussing today are around how best to identify, communicate and or disclose material Environmental, Social and Governance issues. The most common questions raised on our recent webinar were about the materiality of information that is typically included in the corporate ESG / sustainability report, or, content used in some way in broadening discussion in disclosure in the proxy statement, 10-K and other SEC investor-facing communications.
This Issue Brief focused on ESG and materiality assessment presents our best practice to determine company specific materiality and decide on content (to be disclosed or not). A comprehensive Materiality Assessment to determine the specific topics and issues as seen from the investor and other perspectives is first, followed by a Gap Analysis to identify the existing data that aligns with the company specific disclosure determined to be material (as agreed to by corporate leadership). The Issue brief provides an “at a glance view” of how theses first 2 steps inform the creation of the narrative and data sets, drafted, designed and communicated or disclosed in corporate reporting.
To help answer some of the questions raised by participants, we created this Issue Brief focused on ESG and material disclosures.
Hank Boerner – Chair & Chief Strategist, G&A Institute
Louis D. Coppola – EVP and Co-Founder, G&A Institute
Frank Kelley – Director, ESG & Compliance Services, DFIN