Climate groups react to SEC Climate Disclosure Rule

WASHINGTON D.C. — Today the Securities and Exchange Commission (SEC) proposed amendments to its climate disclosure rule that would enhance and standardize businesses’ climate-related disclosures for investors.

Member organizations of the Stop the Money Pipeline coalition and partners released the following statements in reaction to the news:

“It is welcome news that the SEC is finally applying its long-held disclosure rulemaking practice to the financial risks posed by climate change, as many market participants of all types have requested. We are especially pleased to see a requirement for disaggregated reporting of carbon offsets, the use of which has long been rife with evidence of fraud, double-counting, dubious emissions-reductions claims, land rights violations, and other problems. Climate-related financial risks continue to increase, and market participants – including individuals, pension fund managers, and asset management firms – need to know how companies are approaching questions of supply chain emissions reductions, claims of avoided emissions via offsets, approaches to forest and biodiversity loss, how companies are interacting with communities defending ecosystems, and related issues. One area of concern is the treatment of Scope 3 emissions, which appears to set up a perverse incentive for firms to escape reporting requirements by not voluntarily mentioning Scope 3 in climate transition plans. Advocates will certainly be engaging with the SEC on this issue during the comment period” said Moira Birss, Climate and Finance Director at Amazon Watch

“Today the SEC took the long-overdue step of proposing a solution to the problem of undisclosed climate risks,” said Ben Cushing, Campaign Manager for the Sierra Club’s Fossil-Free Finance campaign. “Investors and the public deserve to know the climate-related risks that companies face and how they are being addressed. This is especially important given how many companies have made commitments to address their climate impact without disclosing the full scope of their emissions, the risks their own businesses face from climate change, or the relevant business plans to achieve 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. We look forward to closely reviewing this proposal and offering suggestions to strengthen it, and we urge the SEC to move quickly to finalize the strongest rule possible.”

“Today, the SEC finally moved toward catching up to global norms by applying its long-held rulemaking practices to the financial risks posed by climate change. Wall Street has been able to obscure its exposure to climate-related risks from investors for far too long. It was especially encouraging to see the SEC included a requirement for disaggregated reporting on carbon offsets, as they have been deployed in ways that have contributed to land rights violations, questionable emissions-reductions claims, and other issues. However, we’re concerned that Scope 3 emissions disclosures are essentially left up to issuers to determine the materiality of these emissions. This shields issuers from liability for providing false information and allows firms to potentially omit disclosures for upwards of 75% of climate emissions and as much as 88% of the oil and gas sector’s greenhouse gas emissions. These are emissions that have historically been concentrated in BIPOC communities, fueling generations of harm. We will push for the strongest possible rule during the comment period and raise our concerns with Scope 3 emissions, as well as the troubling fact that environmental justice and community impacts are completely absent from the rule overall,” said Erika Thi Patterson, Campaign Director for Climate and Environmental Justice, Action Center on Race and the Economy.

“The SEC’s proposal is an important step toward protecting investors, ensuring fair and efficient markets, and supporting capital formation. With scientists providing ever starker warnings regarding the breadth and severity of climate-related harms, this proposal will give investors information they need to make informed investment decisions and allocate capital as they wish. Under today’s proposed rule, the SEC moves toward bringing the U.S. in line with other countries already demanding disclosures, creating more transparency and leveling the playing field for companies who are serious about addressing climate-related risk. We urge the agency to carefully review suggestions for improvements to the rule and move quickly to adopt a rule that protects investors and markets,” said Tracey Lewis, policy counsel at Public Citizen.

“Shareholders deserve to understand and be protected from the increasing climate-related risks of the companies they are investing in, and today’s reasonable proposal from the SEC is a good step towards better transparency and standardization.” said David Shadburn, Government Affairs Advocate at the League of Conservation Voters. “We’re glad to see the SEC meeting its mandate to protect investors and ensure well-functioning markets by taking climate risks seriously. Importantly, uniform climate risk disclosures will level the playing field and limit companies’ ability to greenwash and make unsubstantiated emissions reduction pledges. We look forward to submitting comments in support of the strongest possible rule during the public comment period.”

“There’s no doubt that the climate crisis is an emerging and present threat to our financial institutions, and regulators need to step up to safeguard working families and investors.The Security and Exchange Commission’s new draft rule for climate risk disclosure is an important first step to fulfill its mandate to protect investors and capital markets,” said Evergreen Action Chief of Staff Lena Moffitt. “For too long, Wall Street has been allowed to conceal its exposure to climate-related risks from investors, leaving many Americans completely in the dark about a major threat to the long-term security of their life savings. By setting a clear standard for businesses to disclose data about their greenhouse gas emissions and climate risky assets, this rule will level the playing field and arm investors with vital information to protect their financial futures. We applaud Chair Gary Gensler for correcting this market deficiency as part of the SEC’s ongoing mission to protect Americans. But this rule can and should be strengthened. Leaving it up to issuers to determine the materiality of Scope 3 emissions, and shielding those issuers from liability for providing false information, would allow issuers to omit the majority of their emissions from their disclosures. We will continue to engage through the comment period to ensure the final rule establishes a clear Scope 3 requirement, and look forward to the SEC’s continued efforts to address the systemic threat to our economy posed by the climate crisis.”

“Today’s release is an important step in safeguarding US financial markets and protecting investors who have long asked for better climate-related disclosures from companies,” said Kathleen Brophy, Senior Strategist with The Sunrise Project, “The Commission has proposed the disclosure of critical, decision-useful information like GHG emissions, but it also includes generous carve outs that more than address industry concerns around feasibility and reporting burden. We will focus our attention to these areas during the comment period in order to assist the Commission in finalizing the strongest possible rule.”

“We warmly welcome the SEC’s requirements for the long-awaited disclosure rules regarding financial risks posed by climate change. The disclosure rulemaking practices released today are a big deal because it sends a strong signal to the suits on Wall Street that reckless investing in fossil fuels will no longer go unnoticed. But let’s be clear, disclosure is just the first, most essential step to dealing with the problem of fossil fuel finance. With the clarity of the global scientific community, we know that we can no longer finance fossil fuels and need a rapid transition to a clean energy economy that works for all. We stand with the climate and social justice movement, urging the SEC to move quickly to finalize the strictest rule possible.” said Brooke Harper, Regional Campaign Strategist, at 350.org

The Stop the Money Pipeline coalition is a coalition of nearly 200 organizations working to hold the financial backers of climate chaos accountable.