FINRA’s Eileen Murray says government needs to regulate ESG for there

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While much of the world has been focused on environmental, social, and governance issues over the past few years, more recently, cracks are starting to show in the way companies are working to solve ESG challenges. 

Eileen Murray is the chairperson at the Financial Industry Regulatory Authority and the former co-CEO of the world’s largest hedge fund, Bridgewater Associates. She sat down with us to talk about how to increase accountability in ESG reporting and the need for government regulation in the space. 

(The content below has been edited for length & clarity.)

Leslie Picker: You have been more of a skeptic on what’s going on with the whole ESG [Environmental, Social and Governance] trend and really a frenzy over the past few years. What do you think are some of the key issues here? 

Eileen Murray: My skepticism is not about tackling ESG. I think we absolutely have to do that. I think the way we’re going about it, there’s a lack of consistency and standards, in terms of what’s being reported to the public. Who’s accountable? Who’s accountable for those disclosures? Right. And what is the transformation that we need to have to make ESG really real? You know, we’re polluting the planet. How are we going to stop that? And so when I stepped back, my skepticism is about – and I wouldn’t have said this 20 years ago –  I really think we need regulators to step up. They have in certain parts of the world, and start to ensure that companies are applying standards and disclosure, that companies are being open about what they’re doing and transparent. 

It’s complicated. And you know, it’s evolving. So people say, “Oh, it’s too complicated. We can’t deal with it.” Well, 20 years ago, we had a lot of changes in credit exposure reporting and people thought that was very complicated. Same thing with trading analytics. So I don’t believe that this is so complicated, that smart people can’t come to solutions. But I think it’s going to take regulators, business, and educators to deal with this. And it’s an ecosystem problem. One company cannot do this alone and that’s why I think we need government and regulators. So my skepticism is not about the call to action, my skepticism is, are we doing enough? Or are we going to wait till this is a pandemic to deal with?

Picker: What do you mean by that – “wait until this is a pandemic to deal with?” 

Murray: Take DE&I – how many years has that been around? 

Picker: Diversity, equity and inclusion…

Murray: Diversity we’ve been talking about since I was in my 20s, which was quite a quite a long ways ago. But you know, when I first started working, diversity, it was like, 0.5% of the senior people were women and today it’s 17%. And you know Leslie, I don’t know if I should do the happy dance or cry. But we just haven’t made enough progress. And I believe had regulations been more involved, that we would be further along on diversity. I don’t think it’s…