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In its latest 10-K, for example, Alphabet devotes close to 700 words to supply chain risks. Apple's 2016 10-K takes 500 words to describe data breach dangers. Caterpillar's annual filing includes 2,200 words on potential operational perils.
The Dodd-Frank Wall Street Reform and Consumer Protection Act has added to the reporting deluge, controversially requiring information like the ratio of CEO pay to that of the median rank-and-file worker and whether a company uses so-called conflict minerals from war-torn African countries in its supply chain.
The growth of information supplied by companies hasn't, however, deterred investors' calls for additional data from publicly traded U.S. firms. Information on cybersecurity practices, audit committees and auditor relationships, board expertise and diversity, and compensation plans and other workforce metrics are all under discussion.
The extent to which stakeholders are looking for more intelligence became apparent in April 2016. That’s when the SEC released a concept paper discussing possible revisions to Regulation S-K, which contains provisions mandating much of the nonfinancial disclosure by registrants. The initial 1977 version of the regulation included only two disclosure requirements — a description of business and a description of properties. The concept paper, mandated under 2012's Jumpstart Our Business Startups (JOBS) Act, solicits opinion on the effectiveness of the current burgeoning disclosure regime and at the same time opens the door for its further augmentation.
Investors claim their demands are reasonable, and they would like to see some rulemaking eventually arise from the concept paper. But finance chiefs and regulators are skeptical; many think the kind of information discussed would not be germane to an investing decision.
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