SEC commissioner: ESG standards attempt to ‘measure the unmeasurable’

At a speech before a European financial services think tank, a Republican commissioner with the Securities and Exchange Commission (SEC) threw cold water on regulators’ attempts to create environmental, social, and governance (ESG) standards for public companies.

Speaking Friday in Sweden before EuroFi, Hester Peirce argued materiality-based standards—not ESG standards—best suit investors’ needs.

Peirce said ESG-specific standards “cannot help but direct the allocation of private capital, especially when they are combined with sustainable finance initiatives designed to encourage financing of favored activities and the defunding of disfavored activities.” This redirection of capital is not, she argued, meant to primarily serve investors’ needs “but rather to direct the allocation of private capital to further government ends.”