Sustainability
Tenured Harvard Business School professor, now at Oxford University.
One week ago today on July 20, 2021 Trump appointee SEC Commissioner Hester M. Peirce (R) gave a 4,725 word speech to the Brookings Institution titillatingly titled “Chocolate-Covered Cicadas.” The purpose of this cute title eludes me because I never figured out where the chocolate-covered comes from. The only time it’s mentioned again is the snide closing line of her speech in which she says that in 2038 “perhaps even the chocolate-covered cicadas will be net-zero carbon.”
In her speech Peirce notes a request from her fellow Commissioner Allison Herren Lee for comments on climate change. Yes, Commissioner Peirce, climate change is real. Peirce thought it helpful to point out that Lee’s request came on the Ides of March. In her typical soft dig sleight of hand, Peirce points out that “it was not a Commission request.” Nor did the SEC request Peirce to give her speech and here she gives the standard disclaimer “that the views I represent are my own views and not necessarily those of the SEC or my fellow Commissioners.” For this we can count our blessings.
Once again, the Commissioner camouflages her hard-right ideological views by couching her remarks in the pretext of sparking “a textured conversation about the complexities and consequences of a potential ESG rulemaking.” Perhaps in hope of brandishing some green credentials, Peirce plays the naturalist by beginning with an endearing tutorial on the 17-year Cicadian cycle which she somewhat incoherently links to ESG rulemaking.
The construction of her speech nicely maintains the charade of wanting to have a conversation. She organizes it in terms of 10 “theses” (her own rendition of a slimmed down Diet of Worms) supported by 63 (!) footnotes. In this piece I will respond to each of her theses. I will show that Peirce is taking a largely ideological stance in her arguments, that she lacks a fundamental understanding of the concept of materiality, that she is naive about how the investment community actually operates, that she confounds standard setting with other issues like ESG ratings, and that she relies on some dubious sources on critical issues like financial and economic stability.
Robert G. Eccles of Saïd Business School, University of Oxford is the author of a number of books on integrated reporting, sustainability and the role of business in society. His focus is on sustainability from both a company and investor perspective. Professor Eccles is also involved in a variety of initiatives to embed environmental, social, and governance (ESG) issues in real world decision making. One of these is the Sustainability Accounting Standards Board (SASB), of which he was the founding chairman. In 2018, Professor Eccles was selected by Barron’s as one of the top 20 influencers on ESG investing.
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