Global investor momentum on mandated climate disclosure policiesPosted 30th March 2022
The U.S. Securities and Exchange Commission (SEC) announced its proposed rule for mandatory climate disclosure from all publicly listed U.S. companies on March 21st.
This announcement marks a significant moment for climate-related disclosure momentum around the world. Though, by no means is it a first of its kind. Eight countries have already mandated climate disclosure: Belgium, Canada, Chile, France, Japan, New Zealand, Sweden, and the United Kingdom.
Financial institutions have history with disclosure. Many are familiar with climate-related disclosure for its ability to help identify risks and opportunities within portfolios. Disclosure is a critical step for investors that want to create robust, actionable plans to meet net zero. Asset managers with $57 trillion in assets are already decarbonizing their portfolios to achieve net zero carbon emissions, and this number is growing. The Investor Agenda Investor Climate Action Plans (ICAPs) recognise disclosure as one of four key pillars to help investors navigate and take action on climate.
Collaborative investor action on policy
Investors from around the world have long been calling on governments around the world for climate positive policy changes. Last year, The Investor Agenda’s Global Investor Statement to World Governments on the Climate Crisis was the most ambitious example yet. A record 733 investor signatories, with more than US$52 trillion, issued a unified call for governments to end fossil fuel subsidies, phase out coal, and – importantly – mandate climate risk disclosure.
In fact, the SEC proposed rule (page 26 and 27) cites The Investor Agenda 2019 and 2021 Global Investor Statement as testament to the growing investor demand for climate-related risk disclosure.
You can view the asks and the signatories form the 2021 statement here.
With such appetite and momentum, it is clear investor policy advocacy works. Yet still, more public policy on climate is needed to accelerate the transition to a net-zero emissions economy. This is why the Investor Agenda continues to work with investors to urge governments around the world to implement priority policy actions that will allow investors to finance the trillions necessary to address the climate crisis.
Watch this space.
For more information and resources on the SEC ruling, you can read the below statements from Founding Partners of the Investor Agenda, CDP, Ceres and PRI.
Paul Simpson, CEO of CDP and Founding Partner of the Investor Agenda
“CDP welcomes the entry of the SEC to environmental disclosure rule-making, which is a clear statement of U.S. engagement and will provide a critical level-playing field for U.S. public companies as global efforts toward mandatory disclosure solidify in other jurisdictions. Even beyond climate change, the scope of disclosure to CDP through our market led model has demonstrated both the feasibility and desirability of using disclosure to identify financial risks inherent in all environmental risks, and that visionary companies can be eager to stay ahead of the regulatory curve by setting even more ambitious risk mitigation goals than required.”
Mindy S. Lubber, CEO and President of Ceres and Founding Partner of the Investor Agenda
“The SEC is finally heeding the calls from institutional investors, companies, regulators, and the public. The thoughtful climate disclosure proposal announced today would allow investors and companies to better tackle climate-related financial risks across investment portfolios and global supply chains and seize the opportunities that come with acting on those risks.”
Lubber added: “Other regulators around the globe have already required climate disclosure aligned with TCFD, and we commend the SEC for its efforts to ensure U.S. capital market requirements are evolving in the same direction as the emerging global norm. We have been behind the curve compared to other countries, and if today’s proposal is adopted, we can start to catch up. We look forward to supporting the SEC’s work to develop the strongest mandatory climate disclosure rule possible to meet the information needs of investors and the market.”
Greg Hershman, Head of U.S. Policy at PRI, a Founding Partner of The Investor Agenda:
“As the risks stemming from climate change continue to grow, so too do the information needs of investors. The SEC’s three-part mission begins with “protect investors” and investors require consistent, comparable disclosure from companies on their exposure to climate change. The current universe of climate disclosures is an incomplete patchwork of voluntary information presented in different places using different formats. We are hopeful that this update to the SEC’s disclosure rules is able to move efficiently through the regulatory process so investors can have clarity on the decision-useful climate information they need.”