Benchmark Supports the SEC’s Proposed Corporate Climate Risk Disclosure Rule, Urges More Prescriptive Climate Risk and Impact Calculation and Reporting Requirements

The comment, which is available on Benchmark’s website, features many practical recommendations for how the SEC can maximise the Proposed Rule’s benefit to the capital markets. Specifically, Benchmark’s comment details how the Commissioners can best ensure investors are equipped with accurate, complete, contemporary, verifiable data and otherwise decision-useful. Such data is better known as “investment grade” ESG performance data.

“Currently, the Proposed Rule will support a more efficient decarbonisation and climate alignment of the private sector. Yet the SEC should go further and can do so without unduly burdening companies,” said Benchmark founder and CEO R. Mukund. “Establishing more robust rules for companies’ various disclosure components will ensure their disclosures are truly investment grade. Moreover, such an approach will help companies unlock bottom-line advantages in efficiency, culture, recruiting, and other critical issues, at a nominal cost to each company.”

Beyond setting clear standards for investment-grade ESG performance data, Benchmark’s comment urges the SEC to establish prescriptive, industry-specific standards and implementation approaches for companies to use in determining multiple disclosure inputs, including:

• The financial materiality of their climate risks and impacts
• The appropriate metrics and methodologies for quantifying their financially material climate risks and impacts, as well as their corresponding financial implications
• The components of an appropriate climate risk and impact mitigation plan (i.e., transition plan)

Additionally, Benchmark cautions the SEC against the inclusion of provisions requiring certain issuers to include data regarding the greenhouse gas (GHG) emissions attributable to “Use of Sold Products” and “Purchased Goods and Services,” which lend themselves to “double counting.” In place of these provisions, Benchmark recommends the SEC develop a prescriptive model for determining Scope 3 (i.e., value chain) emissions that, to the extent possible, is tailored to specific industries.

The evidence supporting Benchmark’s recommendations stems from a years-long track record of partnering with organisations of various industries, sizes, and circumstances to measure, manage, and report enterprise ESG performance against a range of benchmarks.

“Today’s cloud-based ESG data management and reporting platforms can do far more than help companies fulfil their voluntary and mandatory ESG data disclosure obligations,” explained Benchmark Chief Market Strategy Officer Donavan Hornsby. “These systems enable companies to leverage the insights into their sustainability performance toward otherwise unattainable cost-savings, operational efficiency, and risk mitigation outcomes—attributes that should assuage whatever reservations the SEC has against a more prescriptive approach with its rulemaking.”

Benchmark’s full comment can be accessed in the SEC’s official comment filing for the Proposed Rule here. And for expert insight on the likely compliance implications of the SEC’s imminent rulemaking, as well as data assurance and verification best practices, Benchmark encourages interested parties to view the recording of expert commentary and presentation materials delivered during the fifth ESG Executive Collaboration Forum here.

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