75 Investors With $4.7 Trillion AUM Weigh in on Upcoming SEC Climate Disclosure Rulemaking

Seventy-five investors with $4.7 trillion of assets under management (AUM) Monday sent a letter to the commissioners at the U.S. Securities Exchange Commission (SEC) to express increasing concern about climate change and the systemic and material risk it builds into the global economy. The letter explains why the soon-to-be-released climate change disclosure rule must require verified Scope 1-3 value chain emissions reporting, with a particular emphasis on Scope 3 reporting.

"The SEC has a critical role to play in ensuring that full emissions reporting is timely, comparable, complete, and accurate," said Danielle Fugere, As You Sow president and chief counsel. "Reporting of greenhouse gas emissions is the bedrock of sound investor decision-making on climate and transition risk. Investors need robust, complete, and comparable disclosure of emissions data to determine which companies are aligning their business activities with Paris targets, and thereby minimizing transition risks -- and which are failing to prepare for the rapidly accelerating and economy-wide transition."

The letter explains that for the majority of issuers, including companies with carbon-intensive business models, Scope 3 emissions are the largest source of emissions and present the most significant opportunities to influence greenhouse gas emissions reductions. Failure to require disclosure and reporting of Scope 3 emissions is therefore likely to result in the largest source of emissions remaining unaccounted for in company reporting and unaddressed in company activities. This in turn impacts a wide variety of actors that rely on accurate and consistent emissions information including investors, banks, insurers, and policymakers.

Climate is a global problem. As climate-related impacts reach historic and increasingly catastrophic levels, commensurate ambition and action are required. We have seen that voluntary guidance does not result in either quick or comprehensive action by markets. To prompt necessary action, investors support clear and consistent climate-related disclosure mandates from the SEC, including full reporting of Scope 1-3 emissions.