Sierra Club Submits Supplemental Comments in Support of SEC's Climate Risk, ESG Disclosure Rules

WASHINGTON, DC — The Sierra Club’s Fossil-Free Finance campaign submitted supplemental comments in support of the Securities and Exchange Commission’s proposed climate risk disclosure rule and ESG disclosure rule, after the federal agency re-opened its comment period due to a technical error with its submission form. The new comment period closed on November 1.

• Read the Sierra Club’s supplemental comments here 
• Read the original comments on the climate risk disclosure rule from the Sierra Club and other advocacy organizations here 
• Read the original comments on the ESG disclosure rule from the Sierra Club here
• Update February 2023: Read additional supplemental comments here

In its supplemental comments, the Sierra Club highlighted recent developments that strengthen the case for comprehensive greenhouse gas emissions disclosure requirements in both rules, including the International Energy Agency’s World Energy Outlook released in October 2022, and global bank Credit Suisse’s statements about the Inflation Reduction Act’s role as one of the key drivers of the accelerated transition away from carbon-intensive energy sources. 

“There is no doubt that investors face enormous challenges navigating through the energy transition. Comprehensive GHG emissions disclosures from public companies will be essential to help investors assess such companies’ exposure to the financial impacts of the energy transition and to enable them to allocate capital according to their risk-return preferences,” reads the letter.

The letter outlined several additional key points in support of the proposed rules:

• Investors need protection from concealment of climate risk by companies unprepared for the transition and making emissions reduction pledges unsupported by financial statements 
• Limiting mandated emissions disclosures to Scopes 1 and 2 would exacerbate the problem of undisclosed outsourced emissions 
• Investors need mandatory Scope 3 disclosures to evaluate and compare companies’ management of transition risk 
• Requiring comprehensive emissions disclosures would contribute to the goal of harmonizing U.S. disclosure standards with standards in other jurisdictions    

A Carbon Tracker Initiative study of climate risk disclosure released in October 2022 highlights major problems with today’s sustainability disclosure regime, which combines voluntary reporting and poorly-enforced regulatory requirements. It reviewed the 2021 financial statements of 134 multinational companies responsible for roughly 80% of corporate industrial GHG emissions (those facing the greatest transition risk) and found 98% did not provide sufficient evidence that they considered the material impacts of the energy transition and other climate-related matters when preparing their financial statements, despite regulatory requirements to do so. 

The SEC is expected to release its final rules in early 2023.

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