Commenters differed over whether the SEC’s disclosure requirements go beyond information that would materially help investors, and instead delve into policy issues that should be determined by Congress.

August 19, 2022

SEC Climate Disclosure Comments Reveal Diversity of Views

Below is an excerpt from ISS Corporate Solutions’ recently released paper “SEC Climate Disclosure Comments Reveal Diversity of Views.” The full paper is available for download from the ISS Corporate Solutions online library here.

The Securities and Exchange Commission in March published its long-awaited proposed rule requiring U.S.-listed companies and foreign private issuers to provide more in-depth and standardized climate-related information in their registration statements and annual reports.

The regulator has received about 11,000 comments on the proposal – far more than usual – and continues to get submissions nearly a month after the close of the official review period. ISS Corporate Solutions examined a representative range of comments from investors (both asset owners and managers) and investor groups as well as corporations, financial institutions, academics and former SEC officials.

While there was overwhelming investor support for climate disclosure regulation in general, the comments diverged significantly on the recommended regulatory path ahead. The review found:

  • Strong Support for the proposal’s alignment with the Task Force on Climate-related Financial Disclosures (TCFD)
  • Support for proposal’s alignment with the Sustainability Accounting Standards Board (SASB) and the International Sustainability Standards Board (ISSB) frameworks
  • Corporate concerns over compliance costs and burdens in terms of time and money
  • Questions over material relevance of the SEC proposals, including Scenario Analyses and whether data should be furnished or filed (the latter describing inclusion in a company’s filed financial accounts)
  • Diverse views on mandating Scope 3 (indirect emissions) disclosures
  • Concerns over the speculative nature of greenhouse gas (GHG) disclosures/risks
  • Broad support for board oversight of climate risks, but differences over granular disclosure requirements
  • Disagreement over the SEC’s authority to require such disclosures

By: Paul Hodgson, Senior Editor, ISS Corporate Solutions
Noam Cherki Regulatory Affairs Intern, Institutional Shareholder Services
Karina Karakulova, Director of Regulatory Affairs and Public Policy, Institutional Shareholder Services

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