Are Corporate Report Cards Forthcoming?

Washington could be moving to hold companies more accountable for how they’ve advanced on sustainability measures. 

Last week the House narrowly passed a package of five bills that would require public companies to tell shareholders about their political spending, worker and executive pay, climate risks and taxes. 

Supporters note investors have to rely on voluntary disclosure of environmental, social and governance factors that offer “inconsistent and insufficient information to make informed decisions or to hold the companies they are investing in accountable.”

Opponents argue the legislation would “lead to the naming-and-shaming of America’s job creators” and add additional cost burdens in reporting. 

The one-vote margin of passage in the House suggests the more evenly divided Senate is unlikely to pass this or similar legislation. However, last week’s actions are significant developments in the Biden administration’s steady march toward mandatory, standardized disclosure requirements for public companies and those efforts are likely to continue. 

Even though these efforts may not come into force for more than a year, companies should be prepared they may be inevitable.