Jun. 13, 2022
June 13, 2022 Q24. (Pg. 94) If a registrant has used carbon offsets or RECs, should we require the registrant to disclose the role that the offsets or RECs play in its overall strategy to reduce its net carbon emissions, as proposed? Yes, information about the use of carbon offsets and RECsincluding the types of projects financedis critical to assessing the credibility of net zero transition plans. Q25. (Pg. 95) Should we require a registrant to provide a narrative discussion of whether and how any of its identified climate-related risks have affected or are reasonably likely to affect its consolidated financial statements, as proposed? Yes, investors need to know how climate change and transition activities are already having quantitative impacts on issuers financial statements, and these should be analyzed as part of the traditional audit process. Q98. (Pg. 184) Should we require a registrant to disclose its Scope 3 emissions for the fiscal year if material, as proposed? No. Scope 3 emissions disclosure should be mandatory for all large accelerated filers and accelerated filers, and should not be based on self-determined materiality. Q98. (Pg. 184) Should we instead require the disclosure of Scope 3 emissions for all registrants, regardless of materiality? Yes. There is a long history of SEC requiring disclosures that are important for investor protection and fair and efficient markets, without regard for materiality on a case-by-case basis. SEC Commissioner Lee noted last year, In practice Regulation S-K has, from the outset, required periodic reports to include information that is important to investors but may or may not be material in every respect to every company making the disclosure. We have done this, for example, with respect to disclosures of related party transactions, environmental proceedings, share repurchases, and executive compensation. Q107. (Pg. 187) Should we require a registrant to provide location data for its disclosed sources of Scope 1, Scope 2, and Scope 3 emissions if feasible? Yes. Q107. (Pg. 187) Would requiring location data, to the extent feasible, assist investors in understanding climate-related risks, and in particular, likely physical risks, associated with a registrants emissions sources? Yes, as well as to assess the transition risks that might be specific to location, such as from regulations and consumer preferences in different jurisdictions, states, or countries.