Ginny Cleaveland, Deputy Press Secretary, Fossil-Free Finance, Sierra Club, ginny.cleaveland@sierraclub.org, 415-508-8498
Washington, DC — As the public comment period for the Securities and Exchange Commission's (SEC) proposed rule on corporate climate disclosures comes to a close, the Sierra Club, along with dozens of advocacy groups and tens of thousands of individuals, have signaled their support for the federal regulatory agency’s move to require publicly traded companies to share information about their greenhouse gas emissions and the climate-related financial risks their businesses face.
The Sierra Club and more than 70 allies submitted several comments to the SEC — including two-page and eight-page summaries outlining the key points of a longer technical comment — alongside nearly 15,000 comments submitted by the Sierra Club members and supporters.
“Requiring companies to disclose standardized information on climate risks is an important step in providing investors and the public with clear, consistent, and comprehensive information to support more informed and sustainable investment decisions,” said Ben Cushing, campaign manager for the Sierra Club’s Fossil Free Finance campaign. “This is especially important given how many companies have made commitments to address their climate impacts without disclosing the full scope of their emissions, the risks their businesses face from climate change, or the steps they plan to take to meet their climate pledges. Understanding and mitigating growing climate risks is critical to building a stronger financial system and protecting investors and communities from climate-related shocks.”
According to the comment grouping by the SEC, at least 75% of comments have been supportive of the proposal, highlighting how the rule is good for business, better for investors, and needed for the US economy.
In the eight-page comment letter, the Sierra Club, Americans for Financial Reform Education Fund, Public Citizen, Ocean Conservancy, Evergreen Action, and the Sunrise Project (as well as 70+ other groups who signed on) outlined their support for, and in some cases requested to strengthen, the draft rule, including:
- Narrative and quantitative disclosures of climate risk, management, strategy, and governance.
- Information about the connection between climate-related risks and environmental justice, Indigenous rights, and community-level impacts, and plans to assess, manage, and mitigate those impacts.
- An accelerated timeline for the inclusion of Scope 1 and 2 greenhouse gas emissions reporting, and the adoption of a similar mandatory requirement for Scope 3 emissions for all large companies.
- Location information for sources of greenhouse gas emissions and assets exposed to physical risks.
- Detailed information about climate transition plans, targets, metrics, and progress, including information about the use of carbon offsets to achieve climate goals.
- The impact that climate change and transition activities are already having on a company’s financial statements.
- Revision of the rule to include enhanced climate risk disclosure in private markets.
BACKGROUND
The process comes amid a growing consensus among financial regulators that climate change poses significant risks to the financial system, and that regulators have a role to play in mitigating those risks in order to protect our communities and our economy.
In the past year, even fossil fuel companies like Exxon have begun to reveal that some of their assets may be at risk for impairment due to climate change. And this spring, major U.S. banks faced a slew of shareholder resolutions calling for credible plans that outline how they plan to achieve their long-term climate commitments, largely due to concerns over how the banks will meet those pledges if they continue to finance new fossil fuel infrastructure.
The SEC is expected to release its final climate disclosure rule by the end of 2022. The SEC has also proposed two other rules important to investors concerned about climate change and other environmental, social, and governance (ESG) risks. Comments on the proposals, to prevent misleading or deceptive fund names and to enhance disclosures about ESG products and strategies, are due on August 16. The Sierra Club will be working with its allies and grassroots supporters to defend and strengthen this critical initiative.
ASSETS
About the Sierra Club
The Sierra Club is America’s largest and most influential grassroots environmental organization, with millions of members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit www.sierraclub.org.