Jun. 17, 2022
Dear Sir/Madam, In response to the SEC's request for public comment regarding the proposed rules for "The Enhancement and Standardization of Climate-Related Disclosures for Investors", I would like to provide the feedback below both on behalf of our organization and as an individual concerned about our nation's ability to combat climate change and meet its internationally recognized climate commitments. For both 2018 and 2019, I oversaw and primarily carried out the collection and analysis of all publicly available GHG emission figures for the "Fortune 500" in each respective year using companies' "self-reported/published" data in the form of ESG, Annual Reports, and Sustainability Reports and their publicly-available filings with The Carbon Disclosure Project. Given the last few years' departure from "business as usual" due to the Covid 19 pandemic, I feel that a strong case can be made that analysis of this dataset is reflective of the current state of U.S. based corporate climate-related disclosures and emission levels. I believe that the following high level insights derived directly from research and analysis of many of the largest publicly-traded firms in the US support the position that the bulk of the proposed rules, and specifically those of GHG emissions reporting, be adopted. It is our view that companies be required to account for their emissions within a standardized framework as exists for financial reporting since voluntary reporting has not advanced sufficiently to understand and measure the overall impact of corporate emitters. Analysis shows: -That in 2018 and 2019 respectively, reported annual GHG emission figures among the Fortune 500 totaled 8,036,689,840 and then 7,100,842,901 metric tons of carbon dioxide equivalent not accounting for subsequent estimation modelling for non-reporting firms and incomplete Scope 3 or "value chain" emissions reporting - That in 2018 and 2019 respectively, only 54% and then 56% of the Fortune 500 reported some amount of data across Scope 1, Scope 2, and Scope 3 GHG emissions categories - That in 2018 and 2019 respectively, roughly 64% and then 66% of the Fortune 500 reported GHG emissions figures for Scope 1 and Scope 2 - That in 2018 and 2019 respectively, 36% and then 34% of the Fortune 500 did not report any GHG emissions figures whatsoever - When cross-referenced with emission figures provided to The Carbon Disclosure Project for the same year(s), over 70% of companies who reported in both spaces showed lower figures in their own publications than in the presumably less viewed CDP website/database. *statistically insignificant variance due to "rounding" (between 0-1%) accounts for less than 10 percent of the above in each year In regard to Scope 3/Value-Chain emissions specifically, our research runs counter to the position that companies' only be required to report those figures when "material" or when they have voluntarily elected to include them in their own climate-related (ie "Net Zero" or emission reduction) targets. Alternatively, it supports the cited position that "significant gaps remain in the disclosure, particularly regarding Scope 3 emissions, which, for certain industries, can comprise a majority of GHG emissions” (page 155 of proposal). In fact, any stated goals or targets that exclude Scope 3 would not account for the largest source of carbon dioxide equivalent figures for a majority of firms and excluding value-chain emissions from required reporting standards would encourage the outsourcing of carbon-intensive activities to third parties. Analysis shows: - That Scope 3/Value-Chain emissions accounted for roughly 79% of overall GHG totals among Fortune 500 companies that elected to report across all three scopes in both 2018 and 2019 - That in 2019, only 117 of the 279 Fortune 500 companies who reported some form of Scope 3 figures chose to measure across all (15) subcategories of value-chain emissions. - That the most common form of partial S3 reporting among the Fortune 500 has been when companies elect to report/publish emissions attributable to "Business Travel" only - That the proposed 40% threshold in materiality for including Scope 3 as part of reporting or as part of Net Zero/reduction goals would be met far more often than not given full value-chain accounting among firms In addition to the above information related to contemporary corporate GHG data reporting, I would like to endorse the following: -The use of gross GHG figures so that any RECs, offsets, and removal credits can be assessed to verify impact and prevent "greenwashing" -A multi-year phase and revision process for S3/Value-Chain emissions to accommodate for developing best practices, processes, and estimation tools (but one applying to all firms rather than to a select few judged to be material) -The use of GHG protocol for a standardized approach to accounting -the disclosure of changes to methodology in regards to emission figures -a distinction between Scope 2 "market" and "location" based data -filings being subject to third-party attestation across all three scopes -the disclosure of targets, baseline periods and baseline emissions to aid investors in gauging the progress of firms' stated climate-based commitments and/or goals Lastly, I understand that these proposed rules will require investment in and development of new systems and tools in analysis for those firms that are not already voluntary doing so and, therefore, feel that greater emphasis be placed on measurable/quantifiable data such as GHG emission figures that can be easily understood and compared by prospective investors than on more opaque reporting on potential environmental impacts in aggregate or potential generic or transitional risk to contemporary business models. Thank you very much for the opportunity to comment. Regards, Eric Kenny Eric Kenny Emissions Analyst