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June 16, 2021, 8:28 a.m. EDT

CEOs want SEC climate reporting separate from earnings but concede new rules are likely

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Rachel Koning Beals

CEOs at the powerful Business Roundtable, investor groups and mostly Democratic lawmakers told the Securities and Exchange Commission they’d support mandatory rules forcing publicly traded companies disclose detailed greenhouse gas emissions and other figures that reveal the climate-change impacts and risks to investors.

One of the biggest asks from companies is for the SEC to separate climate reporting from earnings and other disclosures. And some commenters are worried about applying the same rules to smaller companies as large ones.

Fossil fuel concerns, meanwhile, want a role in shaping the reporting requirements, while Republican lawmakers on banking and financial services panels said legislation, and not regulation, should address climate change.

The SEC’s climate disclosure effort — a priority for Chairman Gary Gensler and the commission’s 3-2 Democratic majority — has just closed its public-comment period, receiving about 300 letters. It is expected to pursue rulemaking in the second half of the year.

The SEC issued guidance in 2010 on how companies should voluntarily report their exposure to risks related to climate change. But now, President Joe Biden this spring directed the Financial Stability Oversight Council , which includes the SEC, to address required climate disclosures.

“Disclosure rates are improving, but we still find that companies only disclose on about two thirds of material topics,” Aron Szapiro, head of policy research at Morningstar, and his team wrote in recent research. “Regulatory mandates improve consistency, quality and completeness of disclosures, and would not be placing a huge new burden on many companies, given the progress already made.”

Morningstar submitted comments to the SEC, saying it believes that corporate reporting and disclosure will continue to be incomplete and inconsistent until there is a regulatory requirement to enhance Environmental, Social and Governance (ESG) disclosures.

The letters and other public discourse has revealed a move toward convergence between the existing independent standards bodies and local country and regional regulators. Many of the public letters emphasized the need for clearer tracking, not a disparate system.

The Group of Seven (G-7) wealthiest countries just wrapped a meeting that called for moves to force banks and companies to disclose to investor s their exposure to climate-related risks.

Here’s a sampling of input from companies, trade groups and lawmakers to the SEC.

The Business Roundtable includes chief executives from more than 200 companies responsible for more than 15 million employees and more than $7.5 trillion in combined annual revenues. Its current leadership is headed by Walmart Inc. /zigman2/quotes/207374728/composite WMT -0.41% CEO Doug McMillon. Late last year, the Business Roundtable came out in support of carbon pricing and other measures in an increasingly climate-friendly stance that surprised some observers. But it also stressed its preference for a regulation-lite approach to keep U.S. firms competitive.

In its SEC letter, the group said it wants a transition period as companies report for the first time and wants companies to report on climate change independent of their regular earnings and other reporting requirements. It wants tailored disclosure rules depending on company size and a “liability safe harbor” for newly mandated metrics and for forward-looking information.

The Chamber of Commerce told the SEC that ESG disclosures shouldn’t go beyond what average investors deem important.

“We look forward to continuing to be a constructive partner as the process continues,” Evan Williams, director of the U.S. Chamber’s Center for Capital Markets Competitiveness, said in a statement.

Uber Technologies Inc. /zigman2/quotes/211348248/composite UBER +0.70% was one of the first companies to submit a comment letter to the SEC. It is urging the agency to create a comparable reporting system by incorporating disclosure and accounting standards from two nonprofit organizations—the Task Force on Climate-Related Financial Disclosures, which was created by the Financial Stability Board, and the Sustainability Accounting Standards Board.

Walmart also uses the reporting systems from SASB and TCFD and the World Economic Forum has pushed for both.

A group of large technology companies , including Google parent Alphabet Inc. /zigman2/quotes/202490156/composite GOOGL +3.18% , Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN +0.11% , Facebook Inc. /zigman2/quotes/205064656/composite FB +1.49% and Salesforce.com Inc. /zigman2/quotes/200515854/composite CRM +0.18% , said they support consistent and regular reporting on climate-related issues, according to their group letter.

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July 28, 2021 4:00p
P/E Ratio
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Market Cap
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/zigman2/quotes/211348248/composite
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$ 46.14
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Volume: 19.51M
July 28, 2021 4:00p
P/E Ratio
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$86.05 billion
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$488,553
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$ 2,721.88
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P/E Ratio
29.51
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N/A
Market Cap
$1799.58 billion
Rev. per Employee
$1.35M
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/zigman2/quotes/210331248/composite
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$ 3,630.32
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P/E Ratio
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N/A
Market Cap
$1828.87 billion
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$297,430
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/zigman2/quotes/205064656/composite
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$ 373.28
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P/E Ratio
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Dividend Yield
N/A
Market Cap
$1042.91 billion
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$1.47M
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/zigman2/quotes/200515854/composite
US : U.S.: NYSE
$ 243.96
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Volume: 4.10M
July 28, 2021 4:00p
P/E Ratio
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N/A
Market Cap
$236.58 billion
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$375,437
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