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Aug 11, 2021

US issuers still split on ESG standards, study finds

As the SEC considers imposing climate-related reporting rules, US companies are divided on what they should look like

Half of US public companies say third-party ESG standards are difficult understand, address immaterial information and lack transparency, according to a report by the US Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC).

Despite recent and concerted efforts to standardize ESG reporting standards and frameworks, only 9 percent of companies report that standard setters provide consistent, easy-to-understand metrics.

Forty-one percent of companies report that they do not rely on any standard-setting body when developing climate change and ESG disclosures for SEC filings.

Of those that rely on one or more third-party standard-setting bodies, there is little consistency in their choices. Nearly half (44 percent) use SASB, 31 percent use GRI, 29 percent use TCFD and 24 percent use the Carbon Disclosure Project. SASB and the International Integrated Reporting Council recently launched their new merged organization – the Value Reporting Foundation.

Other standards used by several companies have reportedly been developed by industry-specific organizations, such as the Edison Electric Institute’s sustainability reporting template.

Although many commentators and market participants expect third-party assurance of ESG data to become a widely-adopted practice in the mid-to-long-term, only 28 percent of respondents currently provide some form of third-party assurance.


SEC chair Gary Gensler has asked the SEC staff to develop a mandatory climate risk disclosure rule proposal by the end of the year, and the agency earlier this year sought input on what climate-related disclosure requirements, if any, should look like.

According to CCMC’s research, 84 percent of companies agree that any climate change disclosure rules adopted by the SEC should reflect the differences between industries. Indeed, 61 percent of respondents say the term ESG is subjective and means different things to different companies, making it difficult for regulators to define.

Opinions are evenly split on the idea of the SEC adopting uniform standards for climate change information, with 36 percent of companies supporting and 36 percent opposing the idea.

Nearly half of companies (43 percent) believe the SEC should adopt a comply-or-explain approach to climate disclosure while 33 percent are opposed.

Opinions are also divided on whether the SEC should mandate uniform climate disclosures. More than a quarter (27 percent) of respondents say the agency should designate one existing standard-setter to establish standards, while 21 percent would support the SEC designating multiple standard setters and 24 percent believe the SEC should develop and maintain the standards directly.


Since the SEC issued its 2010 climate reporting guidance, the majority of companies (59 percent) are disclosing more information regarding climate change. Only 1 percent say they are disclosing less information during than they were a decade ago.

Nearly two-thirds (63 percent) of respondents say they are communicating with their shareholders regarding the evolving risk of climate change.

This engagement is informing the nature of ESG disclosures; 46 percent of respondents say they have increased the level of detail in climate change reporting due to shareholder input and 15 percent have increased their reporting frequency about climate change.