Impact Investing Groups Praise SEC decision on climate change disclosure rules

The US Impact Investing Alliance has commended the Securities and Exchange Commission (SEC) for the development of new climate reporting requirements for US listed companies.

The SEC announced last week new climate disclosure rules, covering scope 1, 2 and 3 carbon emissions, which will phase in over the next four years.

The alliance said the move was “one of the boldest steps” taken by a US regulator towards creating an economy that accounts for the risks of climate change in a transparent manner.

Investors have repeatedly advocated for clear, comparable data related to material environmental, social and governance (ESG) issues, and in particular climate change.

Elsewhere, the US Sustainable Investment Forum (US SIF) also backed the SEC’s move. Lisa Woll, CEO of US SIF said in a statement: “[The] vote to propose consistent, comparable and reliable information on climate-related risks is a critical step forward in providing the needed data to make investment decisions.

“This rule will create a framework to structure climate-related information already reported by most large companies”

Even though the groups have praised the SEC’s rule making, many still believe work remains to ensure investors and other financial market participants are equipped with the information necessary to understand and account for climate risk impacts.

Woll added: “US SIF first asked the SEC to establish a comprehensive ESG disclosure framework in 2009. Climate change data is a cornerstone of ESG disclosure.

“The US SIF Foundation’s 2020 Report on US Sustainable and Impact Investing Trends identified climate change as the most important specific ESG issue considered by money managers, comprising $4.2 trillion in assets.”

Following the release of the SEC’s regulations, the US Impact Investment Alliance has published plans to address the importance of comprehensive ESG disclosure requirements and has encouraged its peers to share public comments to the SEC on how companies can better report on and address climate risks.