Student Theses and Dissertations
Date of Award
Spring 5-31-2023
Document Type
Thesis
Degree Name
Master of Arts (MA)
Program of Study
Communication - Corporate Communication
Language
English
First Advisor
Richard Woods
Second Advisor
Michael Bayer
Third Advisor
Caryn Medved
Abstract
The year of 2022 highlighted the importance of understanding how Environment, Social, and Governance (hereafter, ESG) factors impact investors. By the end of 2021, 37.8 trillion USD had been invested in ESG funds, a number expected to grow to $53 trillion by the end of 2025. Despite this bullish projection, controversy has grown about the “materiality” of ESG factors, especially climate risks, as defined by the Securities and Exchange Commission (hereafter, SEC). On March 21, 2022, the SEC proposed rules to enhance the standardization of climate- related disclosures (hereafter The Proposal) to promote consistent, comparable, and reliable information for investors concerning climate-related factors. The 490 page-long proposal polarized investors, advisors, and corporations’ opinions on whether climate factors, as defined in the proposal, are misleading provided in financial disclosures and may perhaps create conflict with the very definition of materiality as set forth by the Supreme Court and found in the guidelines of the SECs statutory authority as set forth in the Securities Act of 1933 and 1934. The debate this paper centers on is whether the “E” of ESG as defined in the SEC’s proposed rules has a material impact on earnings, cash flows and balance sheets for all public companies and would, therefore, be subject to regulation by the SEC. This paper aims to establish and further evaluate the current meaning of “Material Information”, both as set forth by the SEC and by precedents ruled by the Supreme Court, and the impact the climate-risk focused proposal may have on said definition.
Recommended Citation
Lindberg, Matilda, "But Is It Material? A Case Study Evaluating Climate Risk’s Place in Financial Disclosures" (2023). CUNY Academic Works.
https://academicworks.cuny.edu/bb_etds/167
Included in
Banking and Finance Law Commons, Business and Corporate Communications Commons, Business Law, Public Responsibility, and Ethics Commons, Corporate Finance Commons, Environmental Law Commons, Finance and Financial Management Commons
Comments
Disclaimer: This paper does not discuss, examine, or evaluate climate risk’s validity, truth, or worthiness as a social cause in need of regulations. This study merely examines whether the Securities and Exchange Commission is the suitable regulatory body to enforce such regulation and its eventual place in financial disclosures.