Sen. Elizabeth Warren (D-MA) is urging the Securities and Exchange Commission (SEC) to investigate oil firms’ use of environmental, social and governance (ESG) metrics.
At issue, per Warren, is whether large corporations are misleading investors and the public regarding executive compensation via ESG metrics connected to CEO pay while causing and profiting from environmental destruction.
“On October 10, 2021, The Washington Post reported that many corporations that ostensibly tied executive compensation to climate goals, including fossil fuel companies like Marathon Petroleum, Chevron and Occidental Petroleum, were using easily manipulated metrics and shifting goalposts that guaranteed high bonuses for executives even when the corporations caused severe environmental damage,” Warren wrote in a letter to SEC Chairman Gary Gensler outlining the investigation request. “These potentially deceptive environmental, social and governance (ESG) metrics pose a serious problem: they have the potential to mislead investors and the public on the terms and conditions under which executive bonuses are paid to top company officials.”
Warren maintains some oil companies use ESG metrics in both SEC and public statement proxy shareholder filings to reinforce images as environmentally friendly companies, when contributing to major environmental incidents.
“I am a strong supporter of providing investors and the public with climate-related disclosures and using the SEC as a valuable tool to increase climate accountability,” Warren concluded. “The SEC’s increased focus on ESG-related misconduct is a positive development, but the SEC must act to ensure that easily manipulated ESG metrics for executive compensation do not undermine investor protection.”