The proposal of new SEC climate-related disclosure rules rocked the business world. In fact, the proposed rulemaking has drawn so much interest that the SEC extended the public comment period until June 17, 2022. Hundreds of investors, issuers, and concerned citizens have weighed in, and their comments reflect a diverse range of perspectives and expertise. Let’s take a look at a handful of these comments to see what people are saying.
Stakeholder comments on the SEC climate disclosure rules
The following are excerpts from public comments. Full text is available at SEC.gov.
“The biggest change in public company reporting since Sarbanes-Oxley”
"Most public companies view the Climate Disclosure rule as the biggest change in public company reporting since Sarbanes-Oxley internal control requirements. As with the implementation of any groundbreaking rule, companies will be forced to spend a material amount of money hiring consultants (generally from the big 4 accounting firms) to roll out a sound framework. Alternatively, companies can spend material amounts of money hiring an in house team, but in both events shareholders will feel the pressure on earnings related to the roll out of this rule." — Anonymous, CPA CFO of an issuer
“This will allow [investors] to pursue portfolios that positively impact the environment”
“I wholeheartedly believe that requiring publicly traded companies to report their environmental impact with regards to greenhouse gas emissions, is a fantastic idea to inform potential investors of what their money will support. Those who acknowledge climate changes grave impacts on the world will excitedly review companies environmental disclosures to help take into account which investments they consider. This will allow them to pursue portfolios that positively impact the environment, and their finances, if they so choose." — Hunter Potts, Hospitality & Tourism
“There should be a uniform way of tracking”
“Yes the SEC should pass the law requiring an environmental risk disclosure. This is an important factor of how the company is doing and can affect many investors opinions… Most importantly there should be a uniform way of tracking how much each company contributes to global pollution.” — Bethany Fall, Assurance Associate, RSM
“It would be an overstep for the SEC to set environmental standards”
“Whether we admit it or not, climate change is a reality that we must face. I believe it would be wise for investors to be more knowledgeable in the actions of the companies they have stake in. However, I do not feel the government is in a position to regulate what companies investors are able to invest in. The tension that I feel the SEC must find a balance to is facilitating transparency between companies and their stakeholders while not imposing regulations on companies that restrict their operations… It would be an overstep for the SEC to set environmental standards.” — Tyrus Grover
“It is imperative that the SEC require public companies to disclose Scope 1, 2, and 3 emissions”
“In my view, it is imperative that the SEC require public companies to disclose Scope 1, 2, and 3 emissions. I understand that companies are concerned about legal liabilities as it relates to Scope 3 emissions, but the SEC can offer safe harbor legal protection on this. As you may be aware, carbon emission disclosures without Scope 3 reporting will be meaningless, as they account for the vast majority of emissions by U.S. companies. ” — Hans Taparia, Professer, New York University Stern School of Business
“Climate Change guidance for individual investors is essential”
“Climate Change guidance for individual investors is essential… I invest my own retirement account through Vanguard and I invest in a 529 plan for each of my four grandchildren through my state's EDvest program, which is administered by TIAA Cref. Both Vanguard and TIAA Cref offer what are identified as ESG funds among their investment options. But the disclosures of what exactly those funds include or exclude are very difficult to find.” — Judith A Stadler, Member, 350 Madison Climate Action Team
“Smaller companies don’t even have it on their radar”
“I see this proposal creating lots of investment in the Renewable sector (falsely), as well greatly raising the price of electricity all over the country, therefore punishing the poor, and hurting small cap public companies. The bigwig companies that foresaw this proposal (and are pushing it through) do so because they are set up to make huge profits from it, while the smaller companies don’t even have it on their radar.” — Thomas Sloan, President of the Energy Commerce Association, Texas Tech University
“During the pandemic we had daily, simplified reporting… The climate crisis should be at least this important”
“During the pandemic we had daily, simplified reporting of impact and response. The climate crisis should be at least this important to the daily narrative if there is any hope of increasing cultural awareness as to the degree of concern and the adoption of new ideas as solutions. The website covidactnow.org is a great example of how data (aka SEC disclosures) could be made easy to SEE and relate to, with drop down menus for comparison.” — Greg O'Neill, Nurse Educator
Not everyone agrees on the SEC’s role in regulating climate disclosure, or how the new rules should be implemented. Some people have raised concerns about the potential impact on internal resources for auditing and reporting. Others say the rules are necessary for investors to make informed decisions about their portfolio and to prevent greenwashing. The SEC will continue to gather comments on the proposed rulemaking through June 17, but legal challenges are expected to persist long after that.
Regardless of the final outcome for this particular rule, companies should start planning now for an increase in climate-related disclosure requirements — even if you don’t yet know exactly what those requirements will look like.