My apologies to those of you who thought I would expound on the corporate governance implications of Madonna’s early oeuvre; but I want to write about materiality, and I’m a sucker for a catchy title.
Those of us who spend our waking (and many sleeping) hours thinking about disclosure know that materiality is the linchpin of disclosure; if something is material, you at least have to consider disclosing it – though of course, probability and other factors can impact that decision. We also know that there are any number of judicial interpretations of what is and is not material. However, it seems to me that we are approaching a tipping point in how materiality may impact disclosures.
Take, for example, the position of SEC Commissioner Elad Roisman, who has stated, in effect, that there is no need for SEC rules explicitly requiring disclosures concerning climate change and other ESG matters, because existing rules already require disclosure of anything that is material to a company. (For example, see his keynote address to the 2020 National Conference of the Society for Corporate Governance.) I have been a member of the Society for many years, and I have heard many of my fellow members express similar views. However, if that is the case, taking that view to its logical extreme, why have any specific disclosure requirements at all? Why not just say “tell us what’s material”?
Continue Reading Living in a material world