ICI Calls For Mandatory Emissions And Diversity Data
The Securities and Exchange Commission (SEC) should require companies to disclose direct and indirect greenhouse gas emissions data and demographic information about their workforces, says the Investment Company Institute (ICI) in a letter filed with the SEC.
The letter is in response to the SECâ€™s call for input on climate changeâ€“related corporate disclosure. ICI explains that consistent, comparable, and reliable data about climate change and workforce diversity make it easier for fund managers to make investment decisions on behalf of the millions of retail investors who invest in their funds.
The SEC should require companies to disclose direct and indirect greenhouse gas emissions data and demographic information about their workforces, ICI said in a letter filed with the SEC: https://t.co/H2JBVs8SWF
— ICI (@ICI) June 7, 2021
â€śMandating disclosure of greenhouse gas emissions and workforce diversity will give fund managers the consistent, comparable, and reliable data they need to better assess current and future sustainability-related risks,â€ť said ICI President and CEO Eric J. Pan. â€śWhile we believe certain disclosures should be mandatory, itâ€™s essential that the SEC develops a regulatory framework that is flexible enough to allow disclosure practices to develop organically over time. Having a dynamic framework will enhance the quality and volume of disclosures about how sustainability-related risks could affect companiesâ€™ long-term value which drives investment decisions. In the past, the SEC has successfully applied the materiality standard to principles-based regulation, and we believe that standard is an appropriate foundation for any climate changeâ€“related corporate disclosure framework.â€ť
In addition to calling on the SEC to mandate specific climate change and workforce information (pages 7â€“10), ICIâ€™s letter calls upon the Commission to:
- Promote the development of reporting practices, including assumptions, models, and methodologies, before considering requiring companies to disclose other indirect sources of greenhouse gas emissions, such as emissions from business travel, otherwise known as Scope 3 emissions (pages 6â€“10).
- Leverage private-sector initiatives so that the Commission can more easily catch up to, and solidify, the progress on sustainability-related reporting that US market participants voluntarily have achieved over the past decade (pages 10â€“12).
- Enable companies to disclose climate changeâ€“related information in various formats and discourage the use of boilerplate language, which will ultimately produce more robust and meaningful information for investors (pages 12â€“13).
- Be a leader in developing and promoting a global framework for corporate sustainability disclosure, given the international nature of capital markets and the shared challenges that climate change poses to companies and investors worldwide (pages 13â€“15).
- Require private companies that meet specific asset and shareholder criteria to disclose the same sustainability information as public companies so investors can assess and compare those entities as well (pages 15â€“16).
- Establish, consult with, and oversee a committee that includes a wide range of market participantsâ€”including companies, funds, and investorsâ€”to better understand how climate change risk affects companies. This committee also would serve as a resource to help the SEC keep pace with the evolution of climate changeâ€“related reporting, which will position it well for any future rulemaking initiatives (page 17).
Buy side's interest is tepid, but DLT's potential for industry-changing solutions is there, SEI exec says.
SEC Chair says updates to public-company and fund disclosures could increase transparency in capital markets.
Breaking data silos is key to deploying automation beyond 'nuisance' orders.
Northern Trust survey shows 98% of managers incorporate data science to optimize investment performance.
Investors in private markets have struggled with inefficient and manual processes.