June 27, 2022

ESG Disclosure: Goals & Targets Disclosure on the Rise in SEC Filings

Good morning! I know everyone was expecting to see Dave Lynn at the helm of this week’s blogs, but “Dave’s not here” – so you’re stuck with me for another week. The good news is that Emily will handle “The Mentor Blog” this week.

White & Case recently published its annual survey of ESG disclosure practices in SEC filings. The survey reviewed annual meeting proxy statements and annual reports of 50 Fortune 100 companies and identified trends in ESG disclosures from 2020-2022. Given the SEC’s comment letters on climate disclosure & the fact that everyone knew a climate rule proposal was on the way when proxy season began, it’s not surprising that environmental topics were the fastest growing category of ESG disclosures. Trailing close behind were disclosures about human capital management – again, that’s not surprising in light of the SEC’s recent rulemaking in the area.

While the top two spots were claimed by the usual suspects, the third fastest growing category of ESG disclosure was one that made the list for the first time this year – E&S goals and targets. This excerpt provides some details on the survey’s findings concerning these disclosures:

For the first time in White & Case’s annual survey, E&S Goals and Targets made the top seven categories, rising to the third spot with the largest increase in disclosure. This reflects the heightened focus by investors on companies setting specific targets with respect to environmental and social priorities.

Seventy-six of the filings surveyed (or 76%) increased their disclosure related to E&S goals and targets. In total, all but one of the surveyed companies (49 out of 50) included some form of E&S goal or target. Of these, 32 companies included the disclosure in their Form 10-K and 48 companies included it in their proxy statement. Of the 49 companies that included E&S goals and targets, seven companies included them for the first time in their 2022 disclosures.

The survey says that it wasn’t just qualitative disclosures about ESG goals targets that grew this year. A total of 44 companies, or 88% of those surveyed, included quantitative metrics. Of this amount, 18 included such disclosure in their Form 10-K (compared to 11 in 2021) and 42 included it in their proxy statements (compared to 26 in 2021).

John Jenkins