EC-MAP Issues Statement on SEC Climate Change Disclosures

On March 15, the Securities and Exchange Commission (SEC) sought public input on climate-related disclosures, which received over 5,000 comments from public companies, institutional shareholders, asset managers, individual organizations, and other stakeholders.

The comments from EC-MAP on potential Commission guidance or rulemaking highlights the need for a process to digitize existing climate accounting and reporting systems to address the lack of standardization, consistency, and comparability of sustainability/ESG data. We recommend that the SEC support the advanced use of digital tools and technologies to transform existing climate accounting and reporting protocols into a robust system of record to inform future climate policy. EC-MAP notes that companies require a standardized framework to obtain real-time carbon/emissions information that is traceable, accounted for the entire supply chain, and verified from end-to-end, to meaningfully substantiate green, low-carbon, net-zero and other sustainability claims.

 

An excerpt:

“In order for companies and industry sectors to meaningfully respond to investor and legislative/regulatory requests for climate action, EC-MAP is proposing the ‘3-Ts Approach’ with a specific mission to drive standardization. This systematic process embeds a product or commodity with digital Transparency, Trust, and Transactability across its full value chain, and converts it into a differentiated, secure, and high-value digital asset that can be traded electronically.

We believe the 3-Ts Approach intersects with three major trends of the 21st century: digitalization, carbon transparency, and climate finance. It brings better quality data for emissions reduction both for streamlining climate disclosures and for shaping climate policy. This Approach will align various moving pieces in voluntary corporate disclosure with unharmonized ESG reporting frameworks and create consolidation under a standardized and interoperable data architecture.”

 

SEC Chair Gary Gensler recently asserted the need for mandatory disclosure on climate risks as “investors are looking for consistent, comparable, and decision-useful disclosures so they can put their money in companies that fit their needs. Companies and investors alike would benefit from clear rules of the road.”

According to the 2021 Agency Rule List, the SEC is expected to issue a notice of proposed rulemaking on this topic on or before October 2021.

 

Read the full statement from EC-MAP here.