Tom Fox welcomes Karen Woody, Assistant Professor of Law at Washington and Lee University and “uber SEC watcher”, to this week’s episode of the ESG Report. They have an engaging discussion about how the SEC views its role in advancing ESG, and how ESG can impact potential investment opportunities.
 

 
Pushing ESG Forward
The SEC is driving the conversation on ESG disclosures, Karen tells Tom. Their new reporting guidelines on climate risk will be out soon, and they believe there should be more robust reporting in other ESG areas as well. Corporate America should not be surprised, Karen says, as “there’s a very clear link between climate risk and even investor risk and financial risk…” Better reporting will ensure that investors have a better understanding of their investment risk.
 
ESG Overlap
The Exxon shareholder revolt is a great example of how environmental and governance issues can overlap. This case, Karen remarks, “says a lot about governance and activists and the power you can have with what was a very small sliver of control.” Another area of overlap is between social and governance, especially regarding compensation. “It’s an interesting time to be watching this field because it hits on every aspect of life in some ways,” Karen comments. Investors are increasingly looking at ESG as a material factor in deciding where they want to invest.
 
Part of the Total Mix
More investors see ESG as part of the total mix when deciding if an investment is sound. Karen believes that the SEC will move towards more robust ESG reporting standards, but these will be qualitative rather than quantitative. They’re also becoming more strict about enforcement, she tells Tom. Tom asks her to contrast the difference in approach toward ESG between the Trump and Biden administrations. She responds that the ESG is more of a priority under Biden and explains how the SEC is helping to further that agenda.
 
Resources
Karen Woody on LinkedIn | Twitter | Washington and Lee University of Law