Letters to Regulators: SEC Climate Disclosure – New Developments February 2023

Download the PDF here.

Ms. Vanessa Countryman
Securities and Exchange Commission
100 F Street NE
Washington, DC 20549

February 8, 2023
Re: The Enhancement and Standardization of Climate-Related Disclosure for Investors

Attention: 87 FR 21334; Docket ID: SEC-2022-06342; File No. S7-10-22

Dear Ms. Countryman,

We are writing on behalf of Public Citizen, Americans for Financial Reform Education Fund, and Sierra Club to supplement the information provided in previous comments we submitted. The purpose of this letter is to highlight a number of recent developments that further strengthen the rationale for the proposed rule.

As explained in our attached summary of developments related to climate-related financial risk, dramatic changes ushered in by the Inflation Reduction Act, the Russian invasion of Ukraine, and global market trends more generally, are accelerating a rapid transformation in the investment landscape. Global investment in the clean energy transition surpassed $1 trillion last year, a new record and a major jump from the year before. Meanwhile demand for new fossil fuel infrastructure is steadily weakening as even key fossil fuel actors have come to terms with the reality that oil and gas price volatility—as experienced in the wake of Russia’s invasion of Ukraine—is a dangerous liability. In comparison, clean energy is generally cheaper, healthier, and less easily leveraged as a geopolitical tool.

Meanwhile, climate-risk disclosure capacity and expertise of corporations, accountants, and auditors is growing at a rapid rate as companies prepare for an array of new disclosure obligations. Many of the perceived roadblocks raised by commenters to the proposed rule are falling away as the private sector increasingly recognizes the fundamental dynamics of the transition to a decarbonized economy: stronger climate policy, growing customer and employee demand for climate solutions, technological advances and cost reductions in the clean energy sector. Global standard-setters are converging on a set of norms that will guide industry and investors alike. If the SEC enacts a less rigorous disclosure regime, it may well stand alone behind the many other jurisdictions that will swiftly codify the global baseline standards issued by the International Sustainability Standards Board (ISSB). Consequently, the U.S. capital markets will be less fair, and U.S. investors less protected, for the SEC’s failure to modernize with the rest of the world.

The proposed disclosure requirements advance multiple facets of the SEC’s mission.In addition to protecting investors from undisclosed and unreliable information about risks to public companies, they also promote efficient markets and capital formation by making available reliable information about opportunities. The developments highlighted in this letter represent an unprecedented array of economic opportunities for investors—but these opportunities can only be efficiently seized if investors have the standardized, reliable disclosures that are described in the proposed rule.

In particular, the SEC should not retreat on its proposed Scope 3 emissions disclosure requirements, which remain a critical indicator of a company’s exposure to transition risk, its opportunities to capture financial incentives, and its management of those risks and opportunities over time. Further, the SEC should retain the amendments to Regulation S-X requiring disclosure of critical climate-related financial inputs, estimates, and assumptions underlying the consolidated financial statements; expenditure metrics; and significant climate-related impacts on the financial statements. Investors have a right to reliable and comparable disclosures about public companies’ readiness to seize the opportunities of a low-carbon future.


Clara Vondrich
Public Citizen

Alex Martin
Americans for Financial Reform Education Fund

Ben Cushing, Jessye Waxman & John Kostyack
Sierra Club

Download the PDF here.