April 22, 2022
Im a scientist and student studying Energy and Environmental Law.
Id like to make a few comments in regards to S7-10-22 The Enhancement and Standardization of Climate-Related Disclosures for Investors
I like the transparency that this rule is trying to create where companies would have to report their GHG direct emissions under Scope 1, 2, 3. I also like that companies must report if they are purchasing credits to reach their GHG goals. In addition, companies should be reporting if they are selling their emission credits for full transparency. This information can be helpful to investors by giving a better understanding where a company places climate change on their priority lists. Investors wishing to make a difference in climate change could more easily see how their portfolio measures up.
For a reduction in ambiguity consider clarifying net-zero from zero emission footprint. For example: If company Green has upgraded their processes to clean energy and now have emission credits. Company Green sells their credits to company Smoke who has a high amount of GHG emissions. Company Smoke can now meet their emissions goals. Is company Green able to report that they have a zero emission footprint before the sale of credits? What about after they sell their credits to company Smoke? If Company Green contributing to the GHG emissions through Company Smoke? Does it matter if Company Green is making most of their company profits from selling their credits? Are either of these companies using the term Net-Zero?
It seems that the term Net-Zero is being used a lot by a lot of different entities and my concern is that the term may not have the same meaning for all. Please include a clear definition of this term in the final rule.
In my final comment Id like to say that the polarization on the political stage can be debilitating and climate change is a hot button right now. The SEC needs to ensure it is only addressing climate change as it falls into the SEC jurisdiction. Over reaching could cause the standard to end up in litigation that could potentially nullify the intent of the rule.