Jul. 31, 2022
July 31, 2022 I would like to support an alternative to the proposed GHG Metrics Reporting Requirements mentioned as a reasonable alternative in section III. D. 5. (e) of the proposed rule. The current proposal requiresin computing greenhouse gas (GHG) metrics of portfoliosthe inclusion of good faith estimates when portfolio companies do not publicly disclose GHG emissions either by regulatory filings or by public publications. The reasonable alternative mentioned is to require the exclusion of these estimates. It is noted that a substantial number of companies do not publicly disclose their emissions, and that it may be costly for the funds to make estimates. I think this creates incentives for funds to make over-simplistic or bad faith estimates to comply with the requirement of the proposed rule. Although I understand considerations around the potential manipulation of GHG metrics by shifting the portfolio composition, I think it can be mitigated by requiring environmentally focused funds to only invest a limited percentage in nonreporting companiesan alternative that is mentioned in the section. This proposal could limit investors investment options. But since the GHG reporting requirements apply to funds that consider environmental factors but do not affirmatively state that they do not consider issuers GHG emissions as part of their investment strategy, these funds likely already have a limited focus on nonreporting issuers. Besides, the proposed alternative will probably incentivize companies to publicly disclose their emissions. Finally, it will ensure that investors rely on GHG emissions data that is more verifiable, and not subject to estimates made at the fund level.