Environmental, social, and governance, or ESG, is a framework increasingly used to measure factors beyond the balance sheet that impact the financial performance and long-term sustainability of a corporation.
That’s why, this past March, the Bipartisan Policy Center, together with S&P Global, announced a new ESG Task Force to inform policymakers about the ESG debate, discuss how companies are responding, and lay out the issues that are likely to demand their attention moving forward.
Comprised of industry leaders that bring real world experience and a shared commitment to advancing and implementing ESG goals, this task force serves as an objective, bipartisan forum to discuss pertinent issues while also helping inform public debate on how best to proceed. We began by looking at some basic questions that had yet to be adequately answered; how ESG is defined, how ESG information is disclosed, how that information is used, among others.
As investors are increasingly considering ESG factors in their investment decision-making, this has led to an increased need for data, analysis, investment products, and standards, which has ultimately led to a series of complex regulatory questions. There are concerns among many about “greenwashing,” too, and the demand for definitional clarity among policymakers is high.
While ESG efforts have been underway for years in the private sector, government – and particularly Congress – has relatively little experience working on these issues. The Biden administration has already demonstrated interest in a larger government role in guiding, regulating, and potentially mandating a range of ESG frameworks and obligations. Additionally, U.S. companies already have an eye toward Europe, which has moved farther down the road of new corporate governance rules.
Additionally, the Biden Administration is likely to push for increased government action on ESG issues, including mandating disclosure through the SEC. Congress also seems poised to act on a wide range of ESG issues. These factors add an urgency to help properly define ESG for policymakers, companies, stakeholders, and the investment community.
However, there is confusion surrounding the role ESG plays and how it can help companies mitigate risk and meet the increasing demands of their shareholders. The corporate response to the COVID-19 crisis and subsequent economic downturn has brought these issues even more to forefront.
BPC is uniquely positioned to create the collaborative, bipartisan forum required for substantive discussion of these complex issues, and we continue to work on a variety of ESG-related topics, including climate concerns, ESG-related disclosures, ESG rating and ranking systems, and shareholder proposals.
–Dane Stangler, Director of Strategic Initiatives, Bipartisan Policy Center