Daily Archives: October 16, 2020

SEC Commissioner Lee Makes Case For Climate Disclosure

SEC Commissioner Allison Lee has been speaking up about climate change and the need to make communication of climate change and risk factors more transparent to shareholders. Commissioner Lee has written about the need for the SEC to do more to establish specific climate disclosure standards that investors, the consumers of this information, would eventually establish a balance between useful and superfluous information. This has been backed up by many letters and other comments from the investor public, hoping to expand climate disclosures.

However, Commissioner Lee was outvoted and new final rules do not address climate risk communication, ignoring overwhelming investor comment.  The SEC voted to maintain a principles-based disclosure system. Disclosures would be made about climate change only if the topic was material. Investors must trust that each company understands whether issues affect the climate and estimate how greatly. But given the large number of companies that continue to not disclose any information about climate change, can it be assumed that it has no issues on the subject? Commissioner Lee estimates that over 90% of U.S. companies are potentially exposed to material financial impact from climate change. Yet potential investors are not getting that information.

According to Commissioner Lee, much of the private sector accepts climate change and is preparing for a future low-carbon economy given the large potential impact on business by climate change, such as the intensive fire and hurricane seasons. Since this is the future, potential investors need transparent information about businesses’ greenhouse gas emissions and how they are managing climate risks. This can only happen by mandatory public disclosure, which is currently not happening. A secondary benefit of greater public disclosure is this will be a wellspring of information that governments can use to manage their own nation-wide risks. The nation, including companies, must price climate risk accurately to drive investment toward a transition to green energy rather than up and down cycles timed around climate disasters.

CCES can help you determine your greenhouse gas emissions, both direct and indirect and determine cost-saving measures to reduce GHG emissions, which will have added benefits for you. Contact us today at karell@CCESworld.com or at 914-584-6720.

 

New Science-Based Targets Initiative Framework for Financial Institutions

The collaborative efforts of environmental disclosure organization CDP, the United Nations Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF) has developed a new system to determine appropriate carbon reduction targets for different entities. The Science Based Targets Initiative (SBTI) emphasizes the role of engagement with underlying assets to encourage companies to reduce their emissions and ignite climate action in such a way that is beneficial to them as well as the planet.

Nearly 1,000 companies in 50 sectors from coal and gas to pharmaceuticals have pledged to align their carbon reduction plans with the Paris Climate Accords by adopting science-based greenhouse gas reduction targets (SBTs).

A target framework has just been developed for banks and other financial institutions. SBTI has launched its first science-based target framework and validation service for financial institutions. Many of them encourage financial institutions to use what they have the most of – money – to effect a decrease in GHG emissions by, for example, using their large stock offerings to put pressure on heavy GHG emitting companies to reduce emissions permanently.

This has been well received. Dozens of banks worldwide previously declared they would work with SBTI standards, when finalized, to give them a framework to meet climate targets. SBTI uses the power of financial institutions to redirect capital to companies contributing to the clean energy and low-carbon, and away from those companies that adversely contribute to climate change.

Banks and financial institutes must also reduce their own GHG emissions. To be validated as meeting SBTI, Scope 1 and 2 GHG emissions of a financial institution must meet an average annual decline at least 2.5%.

CCES has the experts to help you determine your carbon footprint, your greenhouse gas emissions from all sources, direct and indirect and develop cost-effective strategies to reduce these emissions in the future. Contact us today at 914-584-6720 or karell@CCESworld.com.