Feb. 16, 2023
February 16, 2023 The creation of S7-10-22 would make the public painfully aware of how each registrant weighs their environmental impacts against their financial statement. When compared to SEC form 10-K, which discloses human capital, financial statements, executive compensation, etc. etc., the public will be able to verify that environmental risk mitigation is proportionate to the earnings that a registrant annually accumulates. As such, this data can/will be used to ensure that each registrant is pulling their respective weight in the preservation of environmental conditions. Further, as registrants disclose their intentions, risk mitigation plans, GHG emissions, S7-10-22 will also allow for specific industries to disclose their own sensitivity to environmental impacts, which would allow for trending among similar industries. Thus, creating more identifiable issues to be resolved. Further, S7-10-22 will facilitate much needed conversation around how registrants that may be seemingly anti-environment are impacted by environmental change. In disclosing how climate change, environmental degradation, and negative upstream emission activities are interacting with a registrants business registrants may disclose their concerns and record their interactions with upstream activities and external entities to ensure that the public does not blindly assign blame to those who follow their disclosed environmental impact plans. One aspect I find lacking in this proposed disclosure is a registrants disclosure of mitigation methods. For example, operators of hazardous pipelines have detailed regulations (CFR195) which assists in mitigating risks to environmentally sensitive areas. Are operators now to disclose their individual integrity management plans? Or simply allow catch-all disclosures to summarize their activities? I would like to see more clarification on how registrants can integrate pre-existing regulations into their climate-related disclosures. Subsequent clarification/guidance will be required for registrants to adjust their data to a standardized format. Currently, each industry reports their emissions, plans, risk, etc. etc. in different ways. As such, if the SEC is to create a successful disclosure requirement, standardized forms and filing will need to be developed. Once developed, similarly to disclosing environmental concerns, data will be available to trend in order to create further guidance/planning. Lastly, guidance will need to be provided to prevent subsidiaries from filing disclosures. For those registrants that possess 100+ subsidiaries, the SEC will need to provide guidance on consolidating emissions, creating holistic budgetary reports, and any further climate-related statistic that may be skewed if each subsidiary submits a small portion of a large impact.