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The U.S., unlike other robust nations, is only now beginning to organize the jigsaw-like pieces needed to structure and standardize sustainability reporting requirements, which will be needed to meet newly proposed U.S. Securities and Exchange Commission (SEC) rules.
“When I think about this topic, I’m reminded of walking down the aisle of a grocery store and seeing a product like fat-free milk,” Gary Gensler, SEC chair, said in a statement, “What does ‘fat-free’ mean? Well, in that case, you can see objective figures, like grams of fat, which are detailed on the nutrition label … When it comes to ESG investing, though, there’s currently a huge range of what asset managers might disclose or mean by their claims.”
In March, the SEC detailed proposed rules that would require companies — both foreign and domestic that are registered with the SEC — to report climate impact and emissions information. The proposal was enhanced late last month with amendments “to promote consistent, comparable and reliable information for investors concerning funds’ and advisers’ incorporation of environmental, social and governance (ESG) factors.”
These specific reporting requirements have, until now, been largely optional in the U.S., but pressure is mounting for companies and investors to understand, communicate and act on sustainability data.
But some companies aren’t waiting for an official policy to sort out the specifics. ESG Book, a company founded in 2018, built a cloud-based platform backed by AI-powered analysis that provides its customer base of financial institutions — like Bridgewater, J.P. Morgan, Citi and Robinhood — with sustainability and ESG data of more than 25,000 public companies.
“I think we all recognize that there are a number of big pressures around us that the world has to respon …