SEC climate disclosure rule likely ‘before Christmas’

Before holiday gifts are exchanged, the U.S. Securities and Exchange Commission (SEC) may issue new ESG rules or changes. 

“You should expect in the next six months out of the SEC, I think, a proposal to require disclosure related to climate impacts,” predicted Robert J. Jackson, Jr., the Pierrepont Family Professor of Law at New York University and a former SEC commissioner. “But I think the climate disclosure rule is likely to come before Christmas.”

Jackson spoke at Fortune’s CFO Collaborative series, in partnership with Workday, on Wednesday. The theme was The Promise and the Pressure of ESG Measures. In addition to climate disclosure, a human capital rule is likely to come before the end of the year “requiring some disclosure about workforce pay and labor-related issues,” he said. Also likely to be on the table? “I think you can also expect to see some developments in the crypto space” related to investor protections, Jackson said. 

CFOs should particularly focus on climate disclosure and human capital changes as “those are items that may well find their way into a 10-Q or 10-K in the future,” Jackson said. Accounting changes are likely on the horizon, and CFOs need to be prepared, he said. Professor Jackson added that he’s known SEC Chair Gary Gensler for more than a decade, and as a former Partner at Goldman Sachs, Gensler is not one to drag his feet. He “gets things done,” Jackson said. “The pipe at the SEC is limited, but he’s going to push as much through as he can.”

“The SEC can put out all the rules it likes, but at the end of the day, someone’s got to count this stuff,” Jackson explained. “And what you’ll be doing, I’m sure, is engaging someone, whether the big four [accounting firms] or one of the boutiques who have focused on climate and human-capital related measures, to work through your organization and your teams and get those numbers right, in a fashion that makes you comfortable signing on the dotted line.”

There needs to be “generally accepted standards” regarding accounting, Jackson said. “I think the question is what those standards will be, and where they’ll be drawn from—and there’s no shortage of cooks in that kitchen,” he said. One such cook in the U.S. is the Sustainable Accounting Standards Board, which has been working for more than a decade on “fine-tuning standards focused on material matters in the climate capital space,” he said.

But there’s going to have to be some form of accepted rules down the road, Professor Jackson said. Whatever an SEC rule asks for is the beginning and not the end of the disclosure discussion, he noted. “That helps you when your lawyers understand what you need to find out, but it’s the accountants who are going to help you drill down and make sure you get it right,” he said.

See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

Big deal

DDI, a global leadership consulting firm, released its 2021 CEO Leadership Report on August 11. The report analyzes talent-based issues that face CEOs in the current war for talent. Over time, the CEOs surveyed found their senior teams to be less effective. New CEOs are more optimistic about their teams. The report also found companies that align CEOs and CHROs have 36% fewer leaders who intend to quit within a year. The report is based on a survey of 368 CEOs and more than 2,000 HR professionals, globally, with an average company size of 28,000 employees, DDI noted.

Courtesy of DDI

Going deeper

Leaderboard

Christopher DelOrefice was named EVP and CFO at BD (Becton, Dickinson and Company), a global medical technology company, effective Sept. 6, 2021. DelOrefice succeeds Christopher Reidy, who will retire. DelOrefice is currently vice president of investor relations at Johnson & Johnson, where he was previously CFO of both the consumer and medical devices segments for North America.

Todd Oligino was named CFO at Financial Gravity Companies, Inc., a parent of financial services companies. Most recently, Oligino was the CFO of Altriarch Capital Management, LLC, a multi-strategy investment firm. Oligino previously helped launch Quadrant Structured Investment Advisers.

Overheard

"The old days of distressed debt where I buy something like at 60 or 70 cents on the dollar, take it through restructuring, put some more money into it and sell it for two to three times, that's not happening right now."

—Mark Jenkins, head of global credit at Carlyle Group Inc., as told to Reuters.