Welcome back for our fourth virtual fireside chat during National Entrepreneurship week
with acting chair Allison Herren Lee about matters of importance to small businesses.
Acting Chair Lee yesterday we talked about one of your key priorities diversity and inclusion,
sustainability is another one of your long-held priorities and is clearly something you value
many entrepreneurs are pushing into new frontiers to develop solutions to address
pressing climate and other sustainability issues. We know from the data that small businesses are
often at the forefront of innovation and positive disruptions to the status quo many investors are
also crafting intentional investment strategies around the future that these companies may bring
so for today's question how can we at the SEC support these companies and their investors
for whom sustainability is critical. Absolutely, thank you for that question Martha you're right
this subject has long been a top priority for me there's no question that investors now more than
ever are seeking information on climate risk and other sustainability and ESG topics as
they consider how to deploy capital and that's in part because it's becoming increasingly clear the
correlation between climate and ESG performance and financial performance. ESG risks and metrics
now often underpin traditional investment analyses that are designed to maximize risk adjusted
returns on investments of all types so they really represent a core risk management strategy for
portfolio construction and so businesses large and small importantly are increasingly
competing for capital based on climate and esg performance that makes it more critical than ever
that the market has accurate information that's necessary for investors to assess price
and of course excuse me to assess and price risk and importantly the opportunities so
for many smaller businesses whether public or not this poses an interesting challenge
and in in addition to just traditional risk modeling there's a tremendous amount of capital
in both public and private markets chasing green returns so as you know companies of all types
face numerous demands for this information from numerous sources and companies with
greater resources can devote greater time to responding to all of these requests
so if regulators can bring some consensus and standardization to disclosure this could help
level the playing field for smaller companies i mean that was noted in the recommendation that
we received last year that you probably saw from the investor advisory committee and it recommended
that we pursue standardizing disclosures of risks and opportunities with respect to climate
and other ESG metrics. So if we had a standard take for example TCFD businesses could orient
themselves toward that and maybe shut out some of the noise coming from so many raiders and indexers
and others and as you point out Martha it's very encouraging that small businesses and startups
are proven to be the drivers of innovation in terms of finding sustainable solutions
so i say let's do what we can to try to level the playing field for these companies by coming
up with some baseline standards that will help them compete against some of the larger players
and let's help them showcase those opportunities and compete for investors who are seeking to drive
capital towards sustainable solutions absolutely and for those who are watching who have thoughts
or ideas and feedback that we should be taking into consideration particularly on the small
business front please reach out to us and share your feedback we want to hear from you and again
thank you acting cheerlead for joining us for these virtual fireside chat videos to celebrate
National Entrepreneurship Week. It is National Entrepreneurship Week all year long in our office
and we encourage you to reach out after this week is long over thank you. Thank you Martha.