It is no secret that the Securities and Exchange Commission’s (SEC) current priorities have shifted into the world of nonfinancial governance matters. Earlier this year, SEC Chairman Mary Jo White expressed concern about existing disclosure requirements for board diversity and explained that the SEC staff is reviewing current disclosures with an eye toward providing recommendations for changes. The SEC is also currently exploring rulemaking with respect to sustainability. In April 2016, in connection with the SEC’s disclosure effectiveness initiative, the SEC issued Concept Release No. 33-10064 on Business and Financial Disclosure Required by Regulation S-K (the concept release). The concept release sought comment on modernizing certain disclosure requirements under Regulation S-K. In particular, the concept release requested feedback on the importance of sustainability matters, including climate change. Corporation Finance Director Keith Higgins recently reported that the highest number of comments on the Concept Release related to “improved sustainability disclosure.” In addition, there continues to be heightened interest in cybersecurity given the number of data breaches over the last few years, most recently with Yahoo.
In light of the interest in these priorities, it is an ideal time to explore the impact of potential rulemaking initiatives on these matters. As with past rulemaking initiatives, new disclosure requirements may ultimately lead to changed corporate governance practices. This article explores how SEC rules may drive corporate governance behavior in the context of these priorities.
Sustainability
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