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Large corporations successfully block shareholder climate proposals
This year's proxy season saw major corporations successfully dismissing many climate-related shareholder proposals, raising questions about SEC's role in shareholder democracy.
In short:
- Climate investors struggled to pass shareholder proposals on emissions and renewable energy, with the SEC approving company requests to exclude 68% of these proposals.
- Companies like Bank of America and Walmart were able to block several proposals on greenhouse gas disclosure, while ExxonMobil took legal action against activist investors.
- SEC's leniency towards companies this year mirrors the Trump administration's approach, despite Biden’s 2021 directive to support shareholder climate information requests.
Key quote:
“Of all institutions, the SEC should understand the importance of these proposals, the importance of shareholder democracy, the ability to raise issues of concern with companies and management and boards.”
— Danielle Fugere, president and chief counsel at As You Sow
Why this matters:
Shareholder proposals are crucial for pushing companies to address climate issues. The SEC's current stance makes it harder for climate activists to influence corporate policies, potentially delaying necessary actions to combat climate change.
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Navigating the complexities of the SEC's new climate rule
In a recent move by the Securities and Exchange Commission, questions loom over the efficacy of its landmark disclosure rule in standardizing emissions reporting for investors.
In short:
- The SEC's new rule aims to provide investors with tools to verify companies' climate claims, yet it allows for flexibility in emissions reporting standards.
- This leeway might hinder the comparability of emissions data across companies, despite the rule's intent to enhance transparency.
- The rule focuses on Scopes 1 and 2 emissions, leaving out Scope 3, amidst debate over the SEC's role in environmental policy.
Key quote:
"Is this going to lead to perfect comparability across all companies on emissions reporting? No."
— Janet Ranganathan, managing director at the World Resources Institute
Why this matters:
In an era where climate change poses a significant threat to our planet's health and future, standardized emissions reporting rules for corporations are a critical tool in the global effort to mitigate environmental damage and reduce harms to local communities.
New analysis illustrates the climate, environmental, and human rights tolls linked to petrochemical production surrounding the Houston Ship Channel region.
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A look at the S.E.C.'s modified climate disclosure rules
The Securities and Exchange Commission has scaled back its initial climate disclosure requirements for public companies, bowing to opposition from various sectors.
Hiroko Tabuchi, Ephrat Livni, and David Gelles report for The New York Times.
In short:
- The revised rules demand less from companies regarding emissions reporting and climate risk disclosure than originally proposed.
- Large firms must now report only emissions deemed "material" to their operations, with many small businesses exempt.
- Significant climate-related risk disclosure remains mandatory, despite other softened requirements.
Key quote:
“Thanks to corporate lobbying, disclosure of the very real financial risks from climate change has fallen victim to the culture wars.”
— Allison Herren Lee, former acting chair and commissioner at the S.E.C.
Why this matters:
This development speaks to the ongoing tug-of-war between regulatory efforts to enhance climate transparency and the resistance from various industry sectors. It highlights the challenges of aligning business practices with environmental stewardship in the face of climate change, an issue that resonates deeply with investors, consumers, and policymakers alike.
Methane emissions are vastly undercounted at the state and national level because we're missing accidental leaks from oil and gas wells.
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Newsletter
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SEC revises climate disclosure regulation amid corporate resistance
The SEC has adjusted its climate disclosure requirements, easing mandates on emissions reporting following corporate objections.
In short:
- The SEC will not enforce the reporting of certain indirect emissions known as Scope 3, which occur in a company’s supply chain or through consumer product use.
- The modified rule also scales back on the reporting of direct emissions (Scope 1) and indirect emissions from energy production (Scope 2), leaving it to companies to decide if such information is vital for investors.
- The regulation impacts a broad range of U.S. and foreign companies, eliciting over 16,000 comments from diverse stakeholders during the proposal stage.
Key quote:
“All public companies need to digest the final rules. Based on how the rules are set up, there isn’t a one-size-fits-all approach.”
— Michael Littenberg, attorney at Ropes & Gray
Why this matters:
This regulatory shift is pivotal for health outcomes as it affects how environmental risks are communicated to the public, influencing the decisions of healthcare professionals, scientists and policymakers. It underscores the tension between corporate interests and the need for transparency in environmental impact on a national scale.
As states and corporations increasingly head to court over climate change, a lawyer lays out an ethical roadmap to give the environment a louder legal voice.
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Newsletter
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Upcoming SEC vote on new climate information disclosure rule
The U.S. Securities and Exchange Commission is preparing to decide on a landmark rule mandating public companies to disclose extensive climate-related data, potentially reshaping corporate transparency on environmental impact.
In short:
- The rule would require companies to report how climate change and clean energy transitions impact their financial statements.
- Opposition from Republicans and business groups cite concerns over the rule's complexity and cost.
- Modifications to the initial draft could alleviate some requirements but still mark a significant move towards climate-related corporate accountability.
Why this matters:
This rule will help integrate climate risks into financial considerations, potentially influencing both investment strategies and public policy. It represents a substantial shift in how companies and regulators address the financial dimensions of environmental challenges.
Be sure to read Kristina Marusic’s piece: Oil and gas methane emissions in US are at least 15% higher than we thought.
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Newsletter
Photo by Maxim Hopman on Unsplash
ESG investing and corporate fear of climate risk disclosure
Pro-business politicians embraced ESG investing — until the SEC suggested companies should report their full emissions.
Newsletter
Photo by Ian Hutchinson on Unsplash
SEC's Gensler set for congressional grilling on climate change, crypto
Oversight hearings are normally a snoozefest, but this one has the potential for fireworks.
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