I'm Holly Ojalvo, who is filling in for Peter Vanham. He's on vacation, but of course keeping a close eye on the long-awaited new U.S. Securities and Exchange Commission ruling on climate change disclosures that will require many companies to disclose their greenhouse gas emissions and climate change-related risks. . , including annual reports.
The judgment is significantly watered down from its original proposal and is notable as much for its exclusions as for its content. So-called Scope 3 emissions are generated indirectly along the value chain and can account for a significant portion of a company's emissions. Carbon footprint was omitted from the final version. Direct emissions disclosure requirements for all public companies were similar.
Still, legal challenges began as soon as the ruling was issued. Much of the pushback from state attorneys general and lawmakers is along party lines from Republican districts.
How are business leaders responding? Here's a sample.
Rob Fisher, ESG Leader, KPMG US:
“Whether it's a tipping point or watered down rules, companies are now facing a wave of global requirements. Organizations that view sustainability as an integral part of their strategy will find that they are well-positioned to realize the full value that sustainability initiatives can bring to their business.
“While Scope 3 may be outside the scope of the SEC's climate change rules, it is largely within the purview of U.S. multinationals and perhaps many private companies. California, following the ISSB action. Relaxation in one jurisdiction does not change the burdens imposed on other jurisdictions.”
Maura Hodge, KPMG US ESG Audit Leader:
“The alphabet soup of voluntary climate and sustainability reporting frameworks of a few years ago has become today’s patchwork quilt of climate and sustainability reporting requirements. There are practical challenges to understanding the various reporting obligations while navigating the dual challenges of continuity and heightened compliance risks.
“Organizations that comply with the EU's CSRD requirements may be doing 75% of the work to comply with the SEC. The question arises as to whether this can reduce the burden on businesses.
Alyssa Reid, Chief Sustainability Officer at Sustain.Life, a supply chain decarbonization platform:
“Companies should not be lulled into a false sense of security. Due to existing regulations in California and the EU and associated pressure from investors and consumers, the SEC’s decision to exclude Scope 3 from emissions obligations is unlikely to of global companies. We are already witnessing a frenzied scramble for disclosed data. Companies of all sizes, regardless of their geographic location, are expected to become more aware of climate change within the next decade. We need to understand that disclosure will become the norm.”
Neil D'Souza, Founder and CEO of Makersite, a pioneer in sustainable product design that reduces carbon emissions.
“The SEC rolling back environmental reporting obligations, particularly Scope 3, while disappointing, is unlikely to significantly impact public companies' efforts to do so. It continues to move forward in full force. Why? Because opponents fear being sued if false/incomplete/misleading information is submitted to the SEC. It is not a “burden of reporting'' as some people have put it. Additionally, U.S. companies considering operations in California or the EU will be required to report this data in any case, and many of these companies have already publicly asserted their reduction targets.
“Transparency around carbon emissions is a complex but necessary initiative, but many organizations wait for orders before putting their systems in place. In most cases, the business value goes beyond “compliance reporting.” This is because it has not been released yet. Creating better, differentiated products that have better pricing, higher win rates, better brand performance, reduced supply risks, and lower costs through efficiency measures all lead to stronger It's a value proposition. Getting there will take time and effort, but technologies like AI can help solve many challenges in tracking, reporting, assurance, and dissemination. ”
Cambria Allen Ratzlaff, Chief Responsible Investment Ecosystem Officer for the Americas and APAC, Principles for Responsible Investment (formerly SEC), said:
“The SEC’s anticipated final rules will be a step in the right direction for investors in the U.S. capital markets. Providing investors with consistent, comparable, and reliable disclosures from companies will important for investors who must navigate current and emerging risks and opportunities within the country.
“Investors want important information about their exposure to climate risk factors, and the only way this information can be provided in a consistent, decision-useful way is through a robust disclosure framework. , we look forward to the SEC continuing to build on this rule after its initial implementation. We look forward to working with regulators and policymakers in the future to ensure that investors We look forward to discussing how they can access the information they need to deliver long-term, risk-adjusted returns on their behalf.”
Please see the news below for more information.
Holly Ohalbo
Editor-in-chief, luck
on our radar
Four major US banks withdraw from ESG project finance group (Reuters)
JPMorgan, Citi, Bank of America, and Wells Fargo are all no longer signatories to the financial industry's voluntary ESG benchmarks, Reuters reports. The Equator Principles were established in 2003 to ensure that all large-scale development and construction projects in finance consider their impacts on nature and local communities. The Guardian reported that spokespeople for all four banks told Reuters that the Equator Ten Principles would continue to inform their efforts, but climate change advocates said He says he is concerned about this move. His Equator Principles website maintains a list of countries that have currently and previously signed up to the standard.
BlackRock switches environmental investments to “transition investments” (Yahoo Finance)
The Impact Report has previously noted that the politically charged term ESG is in many ways a dead term. In what could be seen as another nail in the coffin, BlackRock has rebranded its environmental investments as “transition investments.” Tariq Fancy, former chief investment officer of BlackRock's sustainable investing division, told Yahoo Finance that the political headwinds “only hastened a process that would have happened anyway.” BlackRock defines transition investments on its website as “investments focused on preparing for, adjusting to, benefiting from, and/or contributing to the transition to a low-carbon economy.”
