How corporate disclosure committees are adapting in a time of change

Disclosure committee practices are evolving to meet emerging regulations and rising stakeholder demands.

In brief

• Amid a growing focus on cyber, human capital and technology reporting, disclosure committees are expanding in membership, competencies and scope of review.
• General and other in-house counsel are increasingly taking over responsibilities for coordinating the activities of the committee.
• For most organizations, there is a lack of interaction between their disclosure and audit committees, signaling a missed opportunity.

As the regulatory and stakeholder landscape changes, public company disclosure committees are adapting. Once mainly overseeing financial reports, they’re now tackling a wider scope of disclosures due to heightened regulatory attention, shareholder activism, emerging technologies and sustainability concerns. While their structure may vary across different organizations, their influence is universally recognized as pivotal in cultivating a corporate ethos of transparency and ethical conduct.

While not legally required, the establishment of disclosure committees has become standard practice among corporations. An overwhelming majority — 96% — of public companies in a 2024 survey conducted by Ernst & Young LLP (EY US) and the Society for Corporate Governance report having a disclosure committee.

Widening the scope of the disclosure committee

Overall, these bodies are broadening their focus as various developments unfold in the market. Cybersecurity, human capital, ethics and compliance are among the newer issues they’re considering. As noted in the survey, even with the increasing focus and challenges of sustainability-related disclosures, disclosure committees are not adopting a holistic review of sustainability-related reports. The 2024 EY Global Corporate Reporting Survey found that only 47% of finance leaders are “very likely” to believe their organization will meet major sustainability targets like achieving net zero on time, highlighting the need for disclosure committees to play a stronger role in sustainability reporting.

Accompanying this growing assortment of matters is a need for committees to have members with varied backgrounds. Organizations’ increased focus on risk, technology and information security is impacting the composition of disclosure committees, with functions such as enterprise risk management, cybersecurity and human capital management increasingly being included in the mix. Having a more diverse set of backgrounds represented on the committee enables the group to take on a wider scope of topics.

It’s worth noting that general and other in-house counsel are becoming more involved in coordinating disclosure committee activities, increasingly assuming a role that the corporate secretary historically held.

The survey also revealed interesting insights into organizations’ collaborative efforts, highlighting both achievements and the need for enhancements. There is an emerging trend toward enhanced collaboration in the selection of committee members, signaling a concerted effort to break down silos within organizations. This collaborative approach is a testament to the expanding remit of disclosure committees — as the agenda swells with a multitude of issues, it becomes increasingly vital to draw on expertise from various functional areas to shape a committee’s composition effectively. By fostering cross-departmental engagement, organizations can maintain a more holistic and informed perspective in their governance practices. Despite these positive developments, there are opportunities for improvement, as nearly half of the respondents say they have minimal or no formal engagement with their audit committees.