Transparently Sustainable

Sustainable investing, often known as ESG, continues to attract a great deal of interest. And there are plenty of data points to help investors find the most sustainable ways to invest, including Barron's annual "100 Most Sustainable Companies" list, which published last month. 

Here's some telling data from my colleague Lauren Foster, who wrote our latest ranking story: 

In the fifth annual Barron’s ranking of America’s Most Sustainable Companies, shares of the 100 companies on our list returned 34.4%, on average, in 2021, besting the S&P 500 index’s 28.7%. Overall, 47 of the companies beat the index.

But ESG investing remains in its infancy and critics would point to a lack of transparency from the companies themselves when it comes to reporting crucial data for tracking their sustainability. That may be changing.

In a 3-1 vote today, the Securities and Exchange Commission decided to move forward with a proposal that would require companies to disclose annual greenhouse gas emissions, along with climate risks they face. The information would likely be added to annual reports and other corporate disclosures. 

Here's Lauren writing today: 

The draft rules are intended to tackle the risk of greenwashing, or deceptively claiming to operate in a sustainable way, through inadequate or misleading reporting. They are part of a broader push by the administration to address the climate crisis. Last year, Biden announced new targets for the U.S. to achieve “a 50-52 percent reduction from 2005 levels in economy-wide net greenhouse gas pollution in 2030.” 

The proposal now goes to a 30-to-60 day comment period before any final rule is issued. It's sure to be controversial. Margaret Peloso, the lead sustainability partner at law firm Vinson & Elkins, said "you will see litigation immediately.”

You can read the rest of Lauren's story here.