Last week, the Securities and Exchange Commission voted to mandate that public companies disclose climate-related emissions and risks to provide more transparency for current and prospective investors. An important note: Only risks defined as “material” have to be reported, and only companies already disclosing climate-related risks and emissions must continue to do so.
Institutional investors — companies or organizations that will invest on behalf of others — were one of the main catalysts to the SEC’s original drafting of the rule.
“When we were crafting the proposal the really common theme from the investor community was that they want a consistent, comparable decision that provides useful information about companies’ climate-related financial risks,” said Kristina Wyatt, chief sustainability officer at Persefoni and one expert tapped to draft the original iteration of the SEC rule. “That included consistent information about companies’ full scope of emissions.”
According to the Workiva 2024 Executive Benchmark on Integrated Reporting, 88 percent of institutional investors are more likely to invest in companies that integrate financial and ESG data.
“Investors must be vocal in the protection of [the SEC rule] and continue to advocate for further disclosure,” said Thomas P. DiNapoli, New York state comptroller and sole trustee of New York State Common Retirement Fund, in a statement, “like the disclosure of ‘scope 3 emissions,’ which can further improve efforts to measure and address climate-related investment risks.”
Why is this important?
Institutional investors