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FOR IMMEDIATE RELEASE: March 21, 2022
Media
Contacts:
Michael Neuwirth
Chief Communications Officer, ASBN
mneuwirth@asbnetwork.org
SEC’s Proposed
Climate-Related Disclosure Requirements Are a Big Step in the Right
Direction
Washington,
DC – The American Sustainable Business Network (ASBN) and the
business organizations it represents today applauded the Securities
& Exchange Commission’s (SEC’s) proposed rule that would enhance and
standardize registrants’ climate-related disclosures for investors.
The
enhancement and standardization of climate-related disclosures is overdue
and urgently needed to help investors and American businesses compete
effectively in an economy that needs to move faster than it is today
towards decarbonization. Under today’s governance, businesses and investors
working to decrease or eliminate their impact on the climate crisis do not
have a level playing field when it comes to reporting and assessing
climate-related topics and validating suitable investment choices. Investors
and business owners, and consequently their impact on the
climate crisis, will benefit from greater transparency and accountability
proposed by the SEC.
Under
the SEC’s proposal, U.S. companies would be required to have some of their
carbon emissions included in regulatory filings. Scopes 1 and 2
greenhouse gas (GHG) emissions will need to be included in annual filings,
such as 10-Ks.
Additionally, indirect emissions will need to be included from
upstream and downstream activities (scope 3), if material, or if the
company has set a GHG emissions target or goal that includes scope 3
emissions, in absolute terms, not including offsets, and in terms of
intensity.
This type of Information about specific emissions is not
standardized, if it is currently disclosed at all, and the SEC’s proposal
for standardization is also helpful to improve transparency and
verification.
ASBN believes all three scopes are key, particularly scope 3,
because they are the biggest and broadest components of a company’s impact
on climate change for most sectors of industry.
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“ASBN will be issuing its own comment as well as encouraging
its members and network to provide detailed input on the proposal and comment directly. Disclosure will
support all companies being rightfully rewarded in the marketplace that
perform authentically on ESG. We look forward to requirements being
highly inclusive to allow all businesses, especially SMEs, to improve
transparency and accountability throughout their value chains,”
said Ali-Reza
Vahabzadeh, EVP, Membership of the American Sustainable Business Network
and ESG & Corporate Transparency Working Group leader.
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“Investors and businesses need and deserve as complete a
picture as possible of risks and opportunities, particularly as it relates
to material issues that can span generations such as climate impact,”
said Valerie
Red-Horse Mohl, co-chair of ASBN and CFO of East Bay Community Foundation.
“Our climate crisis is fused with racial and gender inequity
and the wealth gap and demands transparency; all people and the
environment will benefit from requiring it as part of our
assessments.”
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"Corporate Directors owe fiduciary duties of loyalty,
care, good faith, confidentiality, prudence, and disclosure to their
corporate shareholders. The duty of care requires directors to inform
themselves prior to making a business decision. The SEC's proposed rules
to require companies to disclose climate related risks positions
directors to fulfill their fiduciary duty of care as required under law
given the vast amount of information that shows corporate transparency is
beneficial to a corporation’s bottom line. The proposed rules are a
good business decision that ASBN will advocate for on Capitol Hill and
beyond,"
said Maritza
T. Adonis, VP, Policy, Advocacy, and Government Affairs for ASBN.
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ASBN has been working to address serious and growing concerns
about business activities which are unaccounted for, or currently escape
disclosure as negative externalities, which at this point also do not
affect the P&L or balance sheet of corporations. The proposed
standards will also help to reduce greenwashing.
Companies of all types that are advertising, marketing,
drafting ESG statements, or disclosing information will be required to pay
extremely close attention to the language used in all of these types of
documents, or run the risk of SEC scrutiny.
Quotes from ASBN members and partner organizations:
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“Climate change is more material to investors now than
ever,”
said Natasha Lamb, Managing Partner at
Arjuna Capital.
“Over $57 trillion in investor assets support a goal of
net-zero-emissions portfolios. In order to accomplish this goal and
avoid material climate risks, transparency from portfolio companies is
key. Not only will the SEC’s climate disclosure rule benefit
investors who seek to avoid climate risk, it will press companies to
better manage their own risk through a new level of
accountability.”
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“For investment firm’s to effectively lead and finance
solutions to climate change, integrity and transparency must be core to
their operations and the industry. Steps toward greater transparency and
accountability will ultimately benefit people, the planet and business,”
said Ron
Gonen, CEO & Founder of Closed Loop Partners, a
circular economy-focused investment firm and innovation center.
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“Etsy is a longtime leader in climate disclosures and has
been vocal in encouraging other companies to take similar steps. We view
today’s SEC’s proposal as a promising step towards creating unified and
organized policies and guidance for corporate climate disclosures,
including Scope 3 greenhouse gas emissions. Etsy has long believed
investors desire consistent and reliable ESG metrics and has voluntarily
included our Scope 1, 2, and 3 emissions in publicly filed financial
reporting for the last four years,”
said Rachel
Glaser, Etsy Chief Financial Officer.
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“Standardizing climate change disclosure language in clear
layman terms is key not only in helping investors understand possible
risks but what a company needs to do to mitigate those risks. It also
allows investors to press at-risk companies for change as not addressing
those risks could have a detrimental impact on performance,”
said Timothy
Yee of Green Retirement, Inc.
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“We, along with many other investors, applaud the SEC for
formally moving forward on expanding climate disclosures. Today’s
proposed rule is a very strong step in the right direction. The depth of
investor comments provided to the SEC last spring show the keen interest
investors have in mandatory, standardized climate disclosures, and the
need that we as investors have for this information,”
said Elizabeth
Levy, Head of ESG Strategy and Portfolio Manager at Trillium Asset
Management, LLC.
While we welcome this proposed rule, to provide the most
utility to investors, a complete set of disclosures needs to include
scope 3 emissions disclosure particularly from the most impacted
industries, including fossil fuels and finance, regardless of size and
whether they consider scope 3 emissions material or not.”
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ASBN will continue to advocate for stronger and more regulated
corporate transparency and ESG disclosure and will be monitoring and
commenting on the issues that relate to these matters.
The American Sustainable Business Network (ASBN)
is a movement builder in partnership with the business and investor
community. ASBN develops and advocates solutions for policymakers, business
leaders, and investors that support an equitable, regenerative, and just
economy that benefits all - people and planet. As a
multi-issue, membership organization advocating on behalf of every business
sector, size, and geography, ASBN and its association members collectively
represent over 250,000 businesses across our networks. ASBN was founded
through the merger of the American Sustainable Business Council and Social
Venture Circle.
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