US investors overwhelmingly support SEC climate disclosure rule

May 10, 2022|Written by |Securities & Exchange Commission

Seventy percent of US retail investors agree that the Securities and Exchange Commission (SEC) should require public companies to disclose standardised information about their climate-related financial risks, according to new polling.

The SEC released its much-anticipated draft rule on climate disclosures in March. Under the proposals, companies will be obliged to report each year on how they are assessing, measuring and managing climate risks. They would also need to disclose their greenhouse gas emissions and explain how they are meeting any climate-related commitments they have made.

The move was broadly welcomed by climate groups who said it would improve transparency and level the playing field for companies serious about addressing climate concerns. But the draft rule has met resistance from oil and gas companies, as well as conservative lawmakers, who have suggested that firms’ voluntary disclosures are sufficient.

The polling, which was commissioned by Public Interest and the Americans for Financial Reform Education Fund, suggests that the investor community does not share the fossil fuel lobbyists’ faith in companies’ voluntary efforts. It revealed that 36% of respondents said they trust voluntary disclosures, whereas 58% would trust disclosures to the SEC. In addition, 71% would trust disclosures that were submitted to the SEC and validated by a third-party auditor.

“It is clear that there is strong, unmet investor demand for comparable, credible information regarding companies’ climate-related financial risks,” said Jessica Garcia, climate finance policy analyst at Americans for Financial Reform Education Fund.

“Investors don’t trust voluntary disclosures. To aid their investment decisions, they want this information filed with the SEC and audited by a third party, which would cut back on the unchecked greenwashing we’ve seen in recent years and inject a higher level of transparency and standardisation across disclosures.”

Meanwhile, a network of climate advocacy organisations is calling on some of the biggest banks in the US to go on record in support of the SEC’s proposal. Bank On Our Future has written to the Bank of America, Citigroup, Morgan Stanley, Wells Fargo, JPMorgan Chase and Goldman Sachs, asking them to voice their support before the consultation closes later this month.

Only the Bank of America has so far expressed support for the draft rule. This is despite the fact that all six institutions are members of the Net Zero Banking Alliance (NZBA), and as such have made a commitment to engage with public policymaking to bring about a net-zero transition in line with climate science.

The letters point out that under the NZBA framework, the banks have committed to decarbonise their portfolios – a commitment that includes their indirect scope 3 emissions. They say that support for the SEC rule is in keeping with this commitment, given that the proposal is intended to provide banks with emissions data, and includes developing a process for standardising emissions under scope 3.

Disclosure: Bank On Our Future is funded and coordinated by the Sunrise Project, a climate advocacy network which also funds Green Central Banking

This page was last updated May 16, 2022

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