The Benefits And Costs Of Climate-Related Disclosure Activities For Companies And Investors

The mission of the SEC is to protect investors. Key to this is providing them with the information they need to make their capital allocation decisions. On March 21, 2022 the Securities and Exchange Commission announced its proposed rule for “The Enhancement and Standardization of Climate-Related Disclosures for Investors.” Comments are due on June 17. As with any rule, it contains an economic analysis of the costs and benefits.

Prior to the SEC’s announcement, the sustainability NGO Ceres and the carbon software accounting firm Persefoni (to whom I’m an advisor) commissioned The SustainAbility Institute by ERM to do a survey of companies and investors on the costs they are currently incurring for climate-related disclosure, analysis, and other activities and their perceived benefits in doing so. Although the questionnaire was rather long and complex, the response rate was very good—39 corporate issuers (i.e., companies) and 35 investors. As announced yesterday, results have been published in “Costs and Benefits of Climate-Related Disclosure Activities by Corporate Issuers and Institutional Investors” by Mark Lee, Emily K. Brock, and Doug MacNair. The report was also discussed in a webinar I moderated on May 11, 2022, with Emily K. Brock and Robert LaCount of ERM, Isabel Munilla of Ceres, and Mike Wallace of Persefoni.