Weekly Corp. Gov / Activism Highlights | The SEC Speaks on Climate

The SEC Speaks on Climate

In a historic week for ESG metrics disclosure, the Securities and Exchange Commission released its long-awaited climate reporting proposals, putting in place a concrete set of new reporting parameters – enough to fill 510 pages.

In a big step towards universal reporting standards, the proposed rules allow for increased transparency and comparative metrics for investors while also raising some complicated issues, such as differing methodologies and the credibility of emissions data.

Those in favor argue that investors deserve this information. In fact, most are already reporting – according to S&P Global data, about 90% of S&P 500 companies are already publishing sustainability reports, but there is currently little uniformity around the reporting. It would also create additional layers of accountability for companies that do pledge carbon neutrality. If effective over time, compliance would lead to reduced emissions and tangible measurements.

Some say it’s more complicated. Last week at Tulane’s Corporate Law Institute, David Katz, partner at Wachtell, said that he worries about the varying levels of disclosure between public and private companies, and about difficulties that smaller companies may face in fulfilling reporting requirements. Several critics of the proposals have also said that certain disclosures, such as those around companies’ value chain (Scope 3), are costly, untenable and challenging to regulate. Others argue it is an overstep, beyond the scope of the SEC’s regulatory powers.

Only time will tell how this data disclosure will ultimately impact activism and overall ESG reporting.

Have a great weekend,

The GPP Team

FEATURED ARTICLES

The Wall Street Journal: New Rules Put Net Zero Pledges Under Scrutiny

The landmark SEC proposals add a dense layer of climate reporting requirements to the existing bedrock of mandatory financial disclosures. Read More

Fortune: The Promise and Peril of SEC Climate Rules

The SEC did the right thing and for the right reasons. Read More

MarketWatch: SEC’s Landmark Climate-Change Ruling Could Demand Companies Account For Pollution They Don’t Directly Create

All eyes have been on whether the agency could force companies to regularly report the more complicated Scope 3 emissions that are out of their direct control. Read More

Fortune: New SEC Proposal Would Make it Harder For Companies To Skimp on Climate Pledges

There is no standard procedure in place for companies to report climate-related risks and emissions, though investors have shown growing interest in recent years. Read More

CNBC: SEC Proposes Broad Climate Rules as Chair Gensler Says Risk Disclosure Will Help Investors

In a media briefing with reporters following the SEC’s Monday meeting, Chair Gary Gensler said the proposed rules would not only help to protect investors but also respond to a barrage of requests for greater clarity about corporate carbon emissions. Read More

ADDITIONAL ARTICLES

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Bloomberg Law: SEC Climate Plan Is New Factor for Activist Shareholder Bids

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The New York Times: Critics Says A Proposed S.E.C. Rule Would Curb Activists Ambitions

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