The Need To Dig Deeper Into Corporate Climate Disclosures
The departments and various offices tally up their carbon emissions and the energy they consume as part of their company’s climate disclosures corporate report. Simple enough. The resulting narrative indicates progress and lists several goals that point to recycling/reuse protocols, building energy efficiency modifications, EV parking spaces, even solar enhancements. A sustainable future looks bright.
What’s not been noted, however, are the supply chains that coalesce into products, the electricity required for data center analysis and storage, or the technology debris that’s likely haphazardly discarded. The ways that companies measure and monitor their emissions are superficial; the real emissions levels are many times times higher than most companies report.
A rigorous carbon accounting process is necessary to reveal emissions hidden within product life cycles, paving the way for businesses to lower their carbon impacts.
It’s time to move to new expectations where anyone who’s interested can see the actual levels of a company’s full carbon usage. As a result, companies will have to step up and change the steps that build their commodities. It’s part of global action where mandates and standardization about corporate climate disclosures are emerging.
Chip in a few dollars a month to help support independent cleantech coverage that helps to accelerate the cleantech revolution!
SCC proposed rules: Last year, the US Securities and Exchange Commission (SCC) proposed rules that would require most of the largest companies to report all emissions — even those that seem peripheral within their supply chains. The 490-page SEC proposal was originally published with a target deadline of October, 2022 for final rules. Following debates about aspects of the proposal such as the Scope 3 disclosures, the date had been pushed back. The SEC has indicated that it now plans to finalize the rule this month. The SEC proposal does not establish environmental policy or require that companies take any climate-related actions other than making more information publicly available.
Comments about climate disclosures: The regulator has since received over 15,000 comments, including submissions from numerous Republican state attorneys general. “I would expect a litigation challenge to be brought immediately once the final rule is released,” Jill E Fisch, a business law professor at the University of Pennsylvania, told the Guardian. “They probably have their complaints already drafted, and they’re ready to file.” Most comments indicated support of the SEC rule. A Mintz analysis suggests the degree of comments and attention indicates the significant impact that is expected to result from the ultimate promulgation of these rules (or a revised version thereof).
Scope 3 emissions: A lobbying group for CEOs of America’s biggest companies opposes a key provision of the SEC proposal that would require some large companies to measure and report emissions generated throughout their supply chains – known as Scope 3 emissions. According to the US EPA, Scope 3 emissions, also referred to as value chain emissions, often represent the majority of an organization’s total greenhouse gas (GHG) emissions. They say estimates for Scope 3 categories can vary in accuracy depending on the available data and the organization’s quantification goal. For example, category 4 –upstream transportation and distribution — has 3 methods: fuel-based, distance-based, and spend-based. Approximately 1,020 companies in the US voluntarily disclosed their Scope 3 emissions in 2021, according to CDP, a nonprofit that operates the world’s largest database of corporate emissions data.
Global climate disclosures pending: Regulators around the world are issuing or strengthening their disclosure requirements for registered companies pertaining to sustainability and climate-related financial risk. In Europe, the European Commission plans to finalize initial reporting standards for corporate sustainability reporting by June. UK regulators are in the process of developing Sustainable Disclosure Requirements and investment labels, with a policy statement and final rules expected this summer.
They did it! Not us: Should companies be held responsible for pollution that they may not directly control? Would the requirement to report supply chain emissions mean that companies will penalize smaller suppliers? Yes, these are areas which will have to be researched and regulated. The minutiae of accounting difficulties aside, improved climate disclosures will reveal actual levels of carbon and begin what will be a long, difficult, and important process of tackling a systemic problem.
Companies should start now: There are a number of steps that companies should take right now to make sure their data warehouses are in order and they’re reporting accurate figures when the new rules go into effect. Because the proposed rules start out by targeting transparency and disclosure over setting reduction targets, some companies have already been getting in the habit of tracking Scope 3 emissions, according to a Reuters analysis. Those that have not should begin to do so immediately. Compiling calculations, of course, becomes the first step toward adoption and utilization of technology to assist in carbon tracking and analysis. Strategy should include the items that stakeholders and management care most about and how leaders are going engage their workforce and internal group.
Multiple benefits: Consumers will be able to compare brands and see which ones actually emit the least amount of carbon. Climate disclosures will make greenwashing the facade that it is. Do investors have the right to know about each ton of carbon a company emits? It’s more than investor rights that’s behind making companies fess up to the damage they cause — companies need to be held accountable for the pollution they cause.
6 ways science can boost climate accountability in 2023: The Union of Concerned Scientists offers a series of suggestions for ways that climate disclosures can become accountable for driving the climate crisis.
- Decision-makers at BP, Chevron, ExxonMobil, and Shell oversee deliberate greenwashing campaigns, so it’s imperative to expose oil and gas industry greenwashing and deception.
- It’s clear that ExxonMobil’s scientists were conducting and contributing to robust climate science as far back as the 1970s. so it’s time to break new ground in climate litigation-relevant science.
- Federal courts have unanimously ruled that climate accountability lawsuits belong in state courts, where they were filed and where the concerns of communities affected by climate harms are front and center.
- Concerted pressure by activists, experts, shareholder advocates, and the investment community as a whole continues to support investor demands for climate action.
- For high-income countries such as the United States, paying our fair share of climate damages means holding accountable the fossil fuel companies that are based here and chartered in our names.
- Strengthening corporate climate disclosures is beginning with the SEC proposed new rule.
Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.
Latest CleanTechnica.TV Video
CleanTechnica uses affiliate links. See our policy here.
