Apr. 27, 2022
My name is Maya Nefs and I am a senior at the University of Colorado Leeds School of Business. In addition to studying strategy and operations, I am focusing on social responsibility and sustainability in business. As someone concentrating on pushing sustainable industry forward in my career, the enhancement and standardization of disclosures provides leverage with which to do so. For example, requiring companies to audit and report their emissions correlates strongly with willingness to take actions that improve operations and drive those emissions down. Selfishly, regulation like this creates more opportunities for me as an employee but more importantly, requiring companies to analyze things like their emissions brings widespread attention and better resources to fighting the issues. Opinion: The proposed regulations are paramount in fighting climate change. Brooking’s white pages for Accelerating the Low Carbon Transition states that “In creating much more capable institutions for deep decarbonisation, one of the most vital strategic challenges will be understanding when new institutions must be built, and when existing ones must be strengthened”. The SEC is an institution seated in a unique place to create systematic change across major industries. The proposed rule greatly strengthens that ability. Additionally, the rule will force companies to take necessary steps without suffocating the public sector. Comments: The phase focused process for implementation is important to give businesses time to collect and report the data accurately, and the focus on materiality when identifying risk is key for multiple reasons. For one, research by the Harvard Business School in coordination with Jean Rodegers from SASB shows that the best way to get selfish players to act is to make them realize how an increasingly volatile climate will impact their business operations and by extension, their bottom line. Secondly, tying reporting to material risks makes the assessments more practical to conduct and assures relevance for each registrant. Requiring reporting on the registrant’s processes for identifying, assessing, and managing climate-related risks supports standardization and promotes inter-industry development of knowledge and best practices. These points should be kept in the rule. The requirement to report scope 3 emissions if the company has publicly stated a climate related goal is essential for combating greenwashing and holding businesses accountable for what they say they are doing. However, it needs to be considered that this could discourage registrants that have not publicly set targets from doing so. It is imperative to align interests so governments, industry and society support each other in a reinforcing feedback or ‘ambition loop’ towards ever stronger action. This is essential for success so that transitions, once begun, become self-sustaining politically, technologically and economically (Brookings). It should be considered that the SEC modified this rule to require all registrants to disclose steps they are taking to achieve the U.S. goal of net zero emissions by 2050. Thank you, Maya Nefs