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Microsoft and Alphabet, two of the most popular companies with investors focused on environmental, social and governance issues, try to stay ESG disclosures outside regulatory files for fear of legal risk.
The ESG positions of technology companies, presented in recent days to the U.S. Securities and Exchange Commission, began a battle with Pimco, Invesco and other large asset managers who want ESG information to be included in records. annual regulatory requirements of 10 K. The SEC plans to make disclosures mandatory and is considering where they should be made.
Josh Zinner, CEO of the Interreligious Center on Corporate Responsibility, which includes religious organizations and other ESG-oriented investors, said such disclosures would create “more equitable playing conditions and highlight the leadership of these companies.”
Microsoft and Alphabet, he said, “position themselves as leaders in sustainability and should certainly support mandatory disclosure on ESG issues, including their regulatory files, where they would be responsible for the content of this information.”
The battle between asset managers and companies for ESG outreach is expected to intensify in the coming months. With global warming and human rights posing new risks for businesses, the SEC has initiated unprecedented disclosure regulations for the growth of the ESG sector.
In 2021, nearly a third of global equity inflows went to ESG funds, Bank of America said in a June 1 report. Assets managed in ESG funds reached a record $ 1.4 million in April, more than double that of a year ago, and grew nearly three times the rate of non-ESG assets, he said. say the bank.
Microsoft and Alphabet have benefited from this increase. Microsoft is the company with the largest stake in ESG funds in the United States, Bank of America said. Alphabet is among the top ten most popular ESG companies and is in nearly half of all U.S. ESG funds, BoA said.
Alphabet joined other technology companies a letter from the SEC last week, it was recommended that ESG disclosures “be provided through separate climate reports to the SEC.”
“Given that climate disclosures are based on estimates and assumptions that involve inherent uncertainty, it is important not to subject companies to undue responsibilities, including those of individuals,” the companies said.
If companies are concerned about being sued, it could hurt the SEC’s overall goal of providing more ESG data to the market, said Patrick Flynn, vice president of sustainability for Salesforce, one of the signatories to the letter. “It is a new process that companies have to go through and they will have to establish new procedures. Allowing some sort of safe port against liabilities. . .[allows]companies to promote themselves willingly and not only do the bare minimum ”.
In a statement, Microsoft said his SEC letter it was not intended to imply that climate disclosures would be kept completely out of the SEC’s statements. He said his climate data collection and verification cycle may not align with year-end financial statements.
While it will continue to provide ESG disclosures outside of SEC statements, Microsoft said that “we believe that climate disclosures in SEC statements should be limited to information that is important to an investment or voting decision regarding the ‘company’.
Alphabet declined to comment.
“While it’s great to see corporate ESG leaders advocating for the SEC to adopt climate disclosure standards, we disagree with their claim that such disclosures should fall outside the current SEC standard presentations, such as the statement of 10 -K, from 10-Q or the representative, “he said. Molly Betournay, shareholder defense director of Clean Yield Asset Management, which has assets managed for $ 450 million. “Standard climate reports should include regular SEC filings”
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