Microsoft and Alphabet, two of the most popular companies with investors focused on environmental, social and governance issues, are trying to continue ESG Disclosures of regulatory filings for fear of legal risks.
ESG jobs for technology companies, which have been filed with the US Securities and Exchange Commission in recent days, have battled with Pimco, Invesco and other big asset managers who want to include ESG information in annual 10-K regulatory filings. The Securities and Exchange Commission plans to make disclosures mandatory and is considering where the disclosure should take place.
Such disclosures would create a “more equal playing field and highlight the leadership of these companies,” said Josh Zener, CEO of the Interfaith Center for Corporate Responsibility, which includes faith-based organizations and other ESG-oriented investors.
He said that Microsoft and Alphabet, “are positioning themselves as sustainability leaders and should certainly support mandatory disclosure in ESG matters, including in their regulatory filings where they will be responsible for the content of this information.”
The battle between asset managers and companies over ESG disclosure is expected to intensify in the coming months. With global warming and human rights posing new risks for companies, the Securities and Exchange Commission has set out to create unprecedented disclosure rules for the booming ESG sector.
In 2021, nearly a third of global equity flows went to ESG funds, Bank of America said in a June 1 report. The bank said assets under management in ESG funds hit a record $1.4 trillion in April, more than double the level a year ago and growing at nearly three times the rate of non-ESG assets.
Microsoft and Alphabet benefited from this increase. Bank of America said Microsoft is the company most popular with US ESG funds. The BoA said Alphabet is among the top 10 most popular ESG companies and is owned by nearly half of all US ESG funds.
Alphabet joins other technology companies in SEC . letter Last week, which recommended disclosure of ESG “is being submitted via separate climate reports to the SEC.”
“Given that climate disclosures depend on estimates and assumptions that have inherent uncertainty, it is important not to subject companies to undue liability, including from private parties,” the companies said.
Patrick Flynn, Vice President of Sustainability at Salesforce, one of the signatories to the letter, said that if companies are concerned about filing a lawsuit, it could hurt the Securities and Exchange Commission (SEC)’s overall goal of bringing more ESG data to market. “It’s a new process that businesses have to go through, and they’re going to need to put in place new procedures. Allowing some kind of safe haven from liability…[allows]Companies to pay willingly and not just do the bare minimum.”
Microsoft said in a statement Her message is SEC It was not intended to indicate that climate detections remain far from fully SEC deposits. It said its cycle of compiling and verifying climate data may not align with year-end financial statements.
While it will continue to make ESG disclosures outside of SEC filings, Microsoft said “we believe that climatic disclosures in SEC filings should be limited to information considered material to an investment or voting decision with respect to the company.”
Alphabet declined to comment.
“While it is great to see corporate ESG leaders call on the Securities and Exchange Commission to adopt climate disclosure standards, we disagree with their assertion that such disclosures should fall outside of existing standard SEC filings such as a 10-K, 10-Q, or proxy statement.” Molly Bitournay, director of shareholder advocacy at Clean Yield Asset Management, which has $450 million in assets under management. Standard climate reports should be included in regular SEC filings.