Dec. 13, 2018
Good morning and welcome to today's meeting of the Investor Advisory Committee. This is your last meeting of the year, and my last as an SEC Commissioner. I want to take this opportunity to thank each of you for your commitment to the Committee. Over the past five and half years, I have greatly benefited from your views about how the Commission can improve the investor experience. The Committee was established to advise and consult with the Commission on a range of issues that are relevant to our nation's investors, including the Commission's priorities. You have been quite busy over that time. And many of your discussions and recommendations have shaped the Commission's actions.
This morning the Committee will discuss corporate disclosures relating to sustainability and environmental, social, and governance ("ESG") topics. Sustainability and ESG factors cover a wide range of issues, including measures of company carbon emissions, labor and human rights policies, and corporate governance structures. These factors involve issues that traditionally were not thought of as part of a financial analysis. However, this thought has become less and less the case. Many of the nation's largest investors have becoming increasingly interested in assessing the long-term investment risks and benefits associated with ESG matters. And, it's not just institutional investors—43% of shareholder proposals submitted during the last proxy season focused on these matters. Why? Because these investors believe that there are verifiable links between ESG matters and a company's operational strength, efficiency, and management. These investors believe it is important to have an understanding of these issues in order to better assess the company's performance. On the other hand, other investors maintain that focusing on ESG matters should not come at the expense of investment returns. What is the right balance? Are these ideas mutually exclusive? Would consistent and comparable reporting standards help? If so, what should they look like? I hope that this morning's panel can provide some insight.
In the afternoon, the Committee will discuss unpaid arbitration awards. When investors believe they have been harmed by a broker-dealer, they generally must go through the FINRA arbitration process to make their claim. Unfortunately, even if a retail customer wins their arbitration, they may not get their damages award. In 2016, 27% of cases where damages were awarded remained unpaid. In dollar terms, investors were unable to recover $14 million that had been awarded to them in the arbitration process. Fortunately, the dollar amount of awards going unpaid is decreasing. For instance, in 2013 there was $75 million in unpaid awards, in 2014 there was $23 million, and in 2015 there was $24 million. This is good news, but we still have a ways to go. I am very interested in hearing everyone's best thoughts today on how to continue to improve this process. It is of vital importance to both retail investors and to the broker-dealers who have not broken the rules.
So, thank you again for your commitment to investors, and I look forward to today's discussions.
 The views I express today are my own and do not necessarily reflect those of my fellow Commissioners or the SEC staff.
 For example, in the Sustainable Investments Institute found that in 2018, 78% of the S&P 500 issued a sustainability report for the most recent reporting period, most with environmental and social performance metrics. See Sol Kwon, State of Integrated and Sustainability Reporting 2018, Investor Responsibility Research Institute & Sustainable Investments Institute (2018).
 See, e.g., Peter Smith, "BlackRock states claim on â€˜sustainable investing' revolution," Financial Times (Oct. 22, 2018), available at https://www.ft.com/content/f66b2a9e-d53d-11e8-a854-33d6f82e62f8; Christine Idzelis, "Investors Want ESG to Take Off in Bonds, Cerulli Says," Institutional Investor (Nov. 12, 2018), available at https://www.institutionalinvestor.com/article/b1bsswzczb7gs6/Investors-Want-ESG-to-Take-Off-in-Bonds-Cerulli-Says.
 Ron Mueller, Beth Ising & Aaron Briggs, "Shareholder Proposal Developments During the 2018 Proxy Season," Harvard Law School Forum on Corporate Governance and Financial Regulation (Aug. 2, 2018), available at https://corpgov.law.harvard.edu/2018/08/02/shareholder-proposal-developments-during-the-2018-proxy-season/; see also Leslie P. Norton, "Attention, Corporate America: Consumers Care About Your Values," Barron's (Dec. 6, 2018), available at https://www.barrons.com/articles/american-consumers-corporate-values-survey-1544110834.
 See Corporate Reporting Dialogue: Better Alignment Project, FAQs, available at http://corporatereportingdialogue.com/wp-content/uploads/2018/11/Frequently-asked-Questions-Corporate-Reporting-Dialogue.pdf.
 Most broker-dealers require customers opening accounts to agree to arbitrate disputes.
 FINRA, Statistics on Unpaid Customer Awards in FINRA Arbitration, available at https://www.finra.org/arbitration-and-mediation/statistics-unpaid-customer-awards-finra-arbitration (last viewed Dec. 10, 2018).
 For a discussion of proposals in this area being considered by FINRA, see FINRA, Discussion Paper—FINRA Perspectives on Customer Recovery (Feb. 8, 2018), available at https://www.finra.org/sites/default/files/finra_perspectives_on_customer_recovery.pdf.