The environment, social and governance (ESG) sector is not the first in which the SEC has been confronted with a realm of burgeoning popularity, forcing the agency to scramble to play catchup. It may be, however, one of the most heavily politicized contexts in which that has occurred, which has put the current SEC commissioners in a difficult position. The result has been a series of public remarks in which the Republican- and Democrat-appointed SEC commissioners – in their personal capacities, rather than on the SEC’s behalf – have asserted very different stances on what role the SEC should take in prescribing ESG measures. To understand some of the tension around ESG within the SEC and gauge where future regulations may land, this two-part series evaluates the points and counterpoints on the topic in recent speeches by the SEC commissioners. This second article synthesizes SEC Chair Gary Gensler’s and Commissioner Allison Herren Lee’s arguments for ESG factors to have a larger role in corporate governance efforts, including mandatory climate risk disclosure rules and directors’ decision-making practices. The first article
presented forceful arguments by SEC Commissioners Hester M. Peirce and Elad L. Roisman against the SEC initiating prescriptive ESG regulations, including ten theses for why it is inappropriate. See “SEC Officials Clarify the Commission’s Stance on ESG Investing and the Role of Disclosure
” (Oct. 15, 2020).