Corporate Governance Business Roundtable Responds to SEC Request for Input on Climate Disclosures

Jun 11, 2021

Washington - Business Roundtable today filed comments in response to a request for input (RFI) regarding potential rulemaking or other actions by the U.S. Securities and Exchange Commission (SEC) related to climate change disclosures. In its filing, the Roundtable expressed support for the SEC issuing a climate disclosure rule proposal and provided its perspective on important points the Commission should consider. 

The Business Roundtable filing reads in part:

“Business Roundtable shares the concerns articulated by many stakeholders, including investors, that climate challenges are creating growing risks in many parts of the economy including from physical risks (e.g., extreme weather), transition risks (e.g., technological and market shifts), and regulatory and policy risks. Climate change is of significant public interest, and we have previously stated our view that the United States should adopt a more comprehensive, coordinated and market-based approach to reduce emissions.  
“We appreciate that there is increasing interest in understanding how companies are impacted by climate change, including the risks and opportunities arising from climate change and the steps companies are taking to combat climate change.  
“… We believe it would be appropriate for the Commission to propose a rule that would govern the disclosure requirements regarding climate change. This approach could have the benefit of improving clarity about the disclosure requirements for companies and for investors. This also could lead to more consistent and comparable disclosures. 
“… In considering a rule proposal for climate change disclosures, we urge the SEC to continue to rely generally on a principles-based approach tied to traditional concepts of materiality. 
“… We recognize that there may be specific metrics or data points that are important to understanding companies’ climate risks and opportunities. Consistent with that view, we would support issuance of a rule proposal to require disclosure of such information provided that any such new proposed requirement relates to metrics or data points that are measurable, quantifiable, widely reported and widely used. Applying these criteria, Business Roundtable would support the proposal of a new SEC rule to supplement traditional principles-based disclosure with a specific requirement to disclose annually Scope 1 and Scope 2 greenhouse gas emissions, consistent with standards developed by the Greenhouse Gas Protocol.” 

In addition, the Roundtable provided examples of provisions that should be included in a rule proposal: 

  • Providing for a transition period, including delayed compliance dates to allow sufficient time for companies to prepare the disclosure for inclusion in an SEC report for the first time.
  • Allowing the disclosure to be provided on a different schedule from the annual report (in a manner similar to Conflict Minerals reports) so that companies have enough time each year to prepare the disclosure outside the time pressures of the regular periodic reporting calendar and address the differentiated data collection timelines for climate metrics.
  • Appropriately tailoring disclosure requirements to companies of different sizes.
  • Providing a mechanism for the disclosure to be furnished rather than filed for purposes of the Securities Exchange Act of 1934.
  • Providing a liability safe harbor for any newly mandated metrics and data points and for forward-looking information provided in response to new disclosure requirements.

For the full Business Roundtable response to the SEC’s RFI on climate disclosures, click here