Until July 21, 2016, the SEC accepted public comments about Regulation SK, which articulates the reporting requirements for public companies’ filings with the SEC. If that sounds dry, that’s because it is! But this little-known regulation is actually critically important for impact investment. Of course, the information that a company discloses about itself is fundamental to investment decision-making. What is at stake in this debate is how much and what types of information companies must report, and many impact investors correctly saw this as an opportunity to help broaden the definition of “materiality” and mandate ESG metrics. Regulating ESG disclosure more broadly, as well as making it mandatory (rather than the current system, which is limited, ill-defined, and voluntary), would represent a major advance not just for impact investment, but responsible business practices as a whole. With this opportunity to gain more accessible, relevant, and accurate information for investors, and more transparency, accountability, and sustainability from businesses, Confluence set out to raise the voices of its member organizations.
On July 14, Confluence held a webinar about Regulation SK moderated by Steve Godeke (Board Member, Jessie Smith Noyes Foundation) and featuring speakers from CERES, SASB, and Domini Social Investments (a recording is available to Confluence members!). The panelists provided a broad overview of the issue, why it matters for impact investors, and especially why it would be useful and impactful for investors to comment on the Regulation before the July 21 deadline. As they described, the SEC reexamines these critical regulations about once every 40 years, making this a truly historic opportunity to participate in a debate that may determine policy for decades to come. As one Advisors Bay member of Confluence articulated following the webinar, “we talk a TON about values, but this policy is actually what matters more to capital markets...it may not matter much to individual investors, but this is how systemic change is driven.”
We certainly agreed, and with the vision and leadership of Shelley Alpern (Director of Social Research & Advocacy, Clean Yield Asset Management) and Steve Godeke (Board Member, Jessie Smith Noyes Foundation), Confluence prepared a letter to the SEC articulating our desire for improved ESG disclosure standards that would make impact investment easier and help institutionalize sustainable practices. 28 different partner and member organizations* with combined AUM over $6.1 billion signed onto Confluence’s letter, and it was submitted on July 21.
We at Confluence are proud to take a stand on the frontlines of the debate, and provide an opportunity for our member organizations to do the same. This issue is a critical one and the exceedingly rare opportunity to voice our members’ ideas and concerns to the SEC was not one that we’d let slip. We look forward to keeping our broader membership, not just our co-signing organizations, updated on the debate within the SEC with confidence that our $6.1 billion-loud voice will make a strong impression on the policymaking process.
*In addition to three signatories wishing to remain anonymous, the following organizations joined with Confluence to advocate stronger ESG disclosure requirements:
The Ocean Foundation; Compton Foundation; F.B. Heron Foundation; NorthStar Asset Management, Jessie Smith Noyes Foundation, Merck Family Fund, Sonen Capital, SRI Wealth Management Group at RBC, Tara Investment Partners, California Clean Energy Fund, Reid Partners, George B. Storer Foundation, The Educational Foundation of America, Christopher Reynolds Foundation, David Rockefeller Fund, The Russell Family Foundation, Swift Foundation, Treehouse Investments, Incourage Community Foundation, Veris Wealth Partners, The Christensen Fund, Robert & Patricia Switzer Foundation, Wallace Global Fund, Surdna Foundation, and Prentice Foundation, Inc.
Thanks to all who signed on, your leadership and advocacy are energizing and inspiring!
