Jun. 06, 2022
Jean D Deupree
Via email to rule-comments@sec.gov
6/6/22
Vanessa A. Countryman
Secretary
Securities and Exchange Commission
100 F Street NE
Washington, DC 20549-1090
RE: The Enhancement and Standardization of Climate-Related Disclosures
for Investors (File No. S7-10-22)
Dear Ms. Countryman:
As an investor, I welcome the opportunity to provide this comment letter
in response to the Notice of Proposed Rulemaking "The Enhancement and
Standardization of Climate-Related Disclosures for Investors" (File No.
S7-10-22) ("Proposal").
I support this Proposal as an important step in providing investors with
the comparable and reliable information they need to assess public
companies' climate-related financial risks. According to the US SIF
Foundation's 2020 Report on US Sustainable and Impact Investing Trends6,
climate change has emerged as the single largest ESG issue among asset
managers that disclose the specific ESG issues they consider. In 2020,
asset managers reported that they analyzed climate concerns across $4.2
trillion in assets.
Voluntary climate disclosures have not met the needs of investors7.
Investors' experience with the results of the SEC's 2010 climate
guidance to publicly traded companies is instructive. Despite many firms
reporting some data, the 2010 SEC climate disclosure guidance has not
satisfied the needs of investors because it essentially allowed firms to
self-determine which climate risks are material.
We support the Proposal's inclusion of narrative and quantitative
disclosure around companies' climate risk management, strategies and
governance in line with the recommendations of the Task Force on
Climate-Related Financial Disclosures (TCFD). In addition, we support
the audited reporting of Scopes 1 and 2 greenhouse gas emissions (GHG)
and reporting of Scope 3 emissions by the largest companies.
To ensure that the proposal creates a robust reporting framework when
finalized, we recommend the following considerations.
Remove the materiality test for Scope 3 reporting by the largest
companies (large-accelerated and accelerated filers.) Relying on
companies to make their own determinations of what is a material Scope 3
emission may lead to incomplete or inconsistent reporting.
If the materiality provisions are not removed, the SEC must provide
clear guidance to companies about their Scope 3 reporting obligations.
Scope 3 assurance for large-accelerated and accelerated filers should be
phased in in the future. Reporting of Scope 3 has already greatly
improved in recent years. It is not unreasonable to believe that this
will continue to improve over time. The SEC should use the existing
assurance framework for assurance of Scopes 1 and 2 by phasing in
limited assurance to the more robust reasonable assurance standard.
Companies must report the methodologies used by third-party firms that
provide their disclosure assurance. In addition, the SEC should provide
guidance on standards for third-party verifiers who are not accredited
with the Public Company Accounting Oversight Board (PCAOB).
The SEC must maintain the reporting and assurance phase-in timelines in
the Proposal. The climate crisis is urgent and further delay in action
by companies and investors will have dangerous consequences.
We recommend that the Commission enhance the proposed rules by
explicitly referencing Indigenous Peoples; and to explicitly reference
the UN Declaration on the Rights of Indigenous Peoples as has been done
in SASB and GRI reporting frameworks.
The mining of transition minerals, such as lithium, cobalt, copper and
nickel, may be located on Indigenous lands and have long lasting effects
on the lives, cultural practices, and livelihoods of Indigenous populations.
The SEC should move quickly to strengthen this framework and finalize,
implement and enforce detailed disclosure requirements for public
companies.
Thank you for considering these comments.
Sincerely,
Jean D Deupree
6 https://protect2.fireeye.com/v1/url?k=31323334-50bba2bf-3132d782-4544474f5631-183ae5950e00ccdf&q=1&e=ba2b7eef-d36b-4e41-9b99-a73731ff8965&u=https%3A%2F%2Fwww.ussif.org%2Ftrends
7 https://protect2.fireeye.com/v1/url?k=31323334-50bba2bf-3132d782-4544474f5631-4a07b13627ef866c&q=1&e=ba2b7eef-d36b-4e41-9b99-a73731ff8965&u=https%3A%2F%2Fwww.iosco.org%2Fnews%2Fpdf%2FIOSCONEWS594.pdf