SEC, ESG, and Investors

In the U.S. economy, corporations are owned by investors. Investors aren’t limited to the rich and famous; anyone with a pension is also an investor. As many in the climate movement know, many pensions holding trillions of dollars collectively still invest in fossil fuel companies and the banks, asset managers, and insurance companies that finance them.

“Shares” represent pieces of ownership in a corporation. Investors exchange capital (money) in return for these units. Common shares enable voting rights and possible earnings (profits). Securities are a more general category and defined as “fungible and tradable financial instruments used to raise capital in public and private markets.” “There are primarily three types of securities: equity—which provides ownership rights to holders; debt—essentially loans repaid with periodic payments; and hybrids—which combine aspects of debt and equity. Public sales of securities in the U.S. are regulated by the Securities Exchange Commission (SEC).” The SEC “promotes full public disclosure, protects investors against fraudulent and manipulative practices in the market, and monitors corporate takeover actions in the United States.”

Check out Sierra Club’s basic primer on the SEC and how sustainable investing rules would help people cut polluting companies from their retirement funds.