Dive Brief:

• The Securities and Exchange Commission (SEC) tapped Satyam Khanna, a former member of the SEC's Investor Advisory Committee, to serve in a newly created role as senior policy advisor for climate and ESG in the office of Acting Chair Allison Herren Lee. 

• Khanna will "advise the agency on environmental, social and governance matters and advance related new initiatives across its offices and divisions," the SEC said in a Feb. 1 press release.

• "Having a dedicated advisor on these issues will allow us to look broadly at how they intersect with our regulatory framework across our offices and divisions," Lee said in a statement. "Satyam's experience, insight, and resourcefulness will help ensure our efforts in this space are thoughtful and effective." 

Dive Insight:

President Biden, during his campaign for office, pledged to step up efforts at fighting climate change and promoting diversity, and the SEC in coming months will likely discuss how companies can measure their progress on such issues.

The federal government currently does not require companies to report on ESG metrics.

"It's time for the SEC to lead a discussion — to bring all interested parties to the table and begin to work through how to get investors the standardized, consistent, reliable, and comparable ESG disclosures they need to protect their investments and allocate capital toward a sustainable economy," Lee said in an Aug. 26 statement.

ESG metric usage is growing. The proportion of companies reporting on their operational sustainability rose to 80% in 2020 from 75% in 2019, according to a KPMG survey.

Several groups are pushing for the adoption of different ESG reporting standards, complicating efforts by companies to achieve uniformity and ensure buy-in by stakeholders. The organizations include the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD).

A rule proposed by Nasdaq in December  may encourage the SEC to take a position on the diversity part of ESG disclosures. The SEC has until mid-March to comment on Nasdaq's plan to require all companies listed with it to disclose diversity statistics and to either have at least two diverse members on their boards or explain why they have not made such appointments.

Khanna was a resident fellow at the Institute for Corporate Governance and Finance at the NYU School of Law. He also served on the Federal Reserve, Banking and Securities Regulators Agency Review Team for the Biden-Harris Presidential Transition.