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Advocacy Groups Push SEC Not to Back Down on Climate Disclosure Requirements

Additional comment from Public Citizen, Sierra Club and Americans for Financial Reform Education Fund on climate risk disclosure as final rule looms

WASHINGTON, DC — Public Citizen, Sierra Club and Americans for Financial Reform Education Fund, have submitted additional comments to the Securities & Exchange Commission on its proposed climate risk disclosure rule. The groups’ February 2023 letter highlights recent developments that strengthen the rationale for the proposed rule and asks the agency not to retreat on its proposed climate risk disclosure requirements, including for disclosure of emissions attributable to a company’s broader economic impact, also known as Scope 3 emissions. The long-awaited final rule on disclosures of climate-related financial risk is expected to be released around April 2023. 

“The proposed disclosure requirements advance multiple facets of the SEC’s mission,” reads the letter. “In addition to protecting investors from undisclosed and unreliable information about risks to public companies, they also promote efficient markets and capital formation by making available reliable information about opportunities. The developments highlighted in this letter represent an unprecedented array of economic opportunities for investors—but these opportunities can only be efficiently seized if investors have the standardized, reliable disclosures that are described in the proposed rule.”

The letter details why a robust and undiluted rule is needed to protect investors by requiring public companies to disclose their preparedness for the physical impacts of climate change and economic changes of the energy transition. The advocacy groups highlight how the Inflation Reduction Act is reshaping the investor landscape, presenting new risks and opportunities that investors can only decipher if they have the transparent and comparable issuer disclosures, including Scope 3 emissions, as the SEC proposal requires. 

“The energy transition is happening whether its enemies want it to or not,” said Clara Vondrich, senior policy counsel at Public Citizen. “As we told the SEC, dramatic changes ushered in by the Inflation Reduction Act, the Russian invasion of Ukraine, and global market trends will accelerate a rapid transformation in the investment landscape. Attempts to weaken the climate disclosure rule will only make U.S. capital markets less fair and threaten investors by preventing the SEC from modernizing alongside the rest of the world.” 

The comment also counters critics’ claims that Scope 3 disclosures would be unduly burdensome, including by noting that the International Sustainability Standards Board (ISSB) will require Scope 3 emissions in its new climate disclosure standard, which is expected to be adopted in jurisdictions worldwide.

“If the SEC enacts a less rigorous disclosure regime, it may well stand alone behind the many other jurisdictions that will swiftly codify the global baseline standards issued by the International Sustainability Standards Board (ISSB). Consequently, the U.S. capital markets will be less fair, and U.S. investors less protected, for the SEC’s failure to modernize with the rest of the world,” reads the letter.

The Public Citizen’s previous comments to the SEC are available online: