Search
Close this search box.
Search
Close this search box.

S.E.C. Votes For Mandatory Climate Disclosure: Now What?

© AdobeStock
The question now is whether the S.E.C. is the right agency to police these disclosures in the years to come.

Editor’s Note: As ESG governance and disclosure enters a new, more intense phase, we’ll be hosting a one-day update session focused on the most critical issues for public company board members May 5, 2022. Join Us >

SEC Chair Gary Gensler

After months of negotiating the details, the U.S. Securities and Exchange Commission on Monday voted 3-1 to propose tough new climate requirements for publicly-traded companies, culminating a years-long push to make so-called ESG metrics a formal part of corporate disclosure.

Under the proposal, which will be open for public comment over the next 60 days, companies would be required to spell out the greenhouse-gas emissions from their own operations as well as getting independent audits of their estimates, in much the same way they now must account for financial results.

As the Wall Street Journal reported, they would also, in some cases, need to report out in S.E.C. filings the emissions for not only their own companies, but those of their supply chains and consumers, known as Scope 3 emissions. An official told the paper that under the proposal, most Fortune 500 companies would likely need to report Scope 3 information to the S.E.C.

“Today, investors representing literally tens of trillions of dollars support climate-related disclosures because they recognize that climate risks can pose significant financial risks to companies, and investors need reliable information about climate risks to make informed investment decisions,” SEC Chair Gary Gensler wrote in a statement. “Companies and investors alike would benefit from the clear rules of the road proposed in this release. I believe the S.E.C. has a role to play when there’s this level of demand for consistent and comparable information that may affect financial performance.”

Critics of S.E.C. involvement say the nation’s investing watchdog has dubious jurisdiction when it comes to measuring environmental standards among companies.

The S.E.C.’s approach under Gensler is part of a larger push by the Biden administration to involve the federal government far more in the fight against climate change, citing it as a major risk to the financial system.

Many companies have said over the past few years that they would welcome clarity—and a centralized set of metrics—amid an onslaught of confusing ESG disclosure “frameworks” that pummel their IR departments with endless, differing requests for information.

The question now is whether the S.E.C. is the right agency—or will prove to be the right agency—to police these disclosures in the years to come.

“Setting climate policy is the job of lawmakers, not the S.E.C., whose role is to facilitate the investment decision-making process,” former S.E.C. chair Jay Clayton wrote in a Oped for the Wall Street Journal on Sunday. “Taking a new, activist approach to climate policy—an area far outside the S.E.C.’s authority, jurisdiction and expertise—will deservedly draw legal challenges. What’s worse, it puts our time-tested approach to capital allocation, as well as the agency’s independence and credibility, at risk.”


MORE LIKE THIS

  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events

    Roundtable

    Strategic Planning Workshop

    1:00 - 5:00 pm

    Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process

    Executives expressed frustration with their current strategic planning process. Issues include:

    1. Lack of systematic approach (70%)
    2. Laundry lists without prioritization (68%)
    3. Decisions based on personalities rather than facts and information (65%)

     

    Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns.  They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning.  Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process.  This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented.  If you are ready for a Strategic Planning tune-up, select this workshop in your registration form.  The additional fee of $695 will be added to your total.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.