US asset managers have ‘significant concerns over SEC’s climate disclosure proposal’

In a post for the Harvard Law School Forum on Corporate Governance, Morningstar’s Lindsey Stewart argues that most of the top US asset managers are supportive of the Securities and Exchange Commission’s (SEC’s) attempts to mandate consistent climate disclosures, but they have significant concerns about the approach proposed. Stewart, who is director of investment stewardship research, wrote that there is broad-based support for Scope 1 and Scope 2 emissions but there are objections and concerns in certain areas. These include materiality, Scope 3 measurements and the requirement of climate expertise on boards. Stewart writes: “Climate-related risks have increasingly become important for many companies within various industries and, as such, disclosures in this area are financially material and a key aspect of investor decision-making – a point emphasised in Morningstar’s own response to the SEC. Asset managers that have committed to addressing the climate crisis should be keen to engage with regulators like the SEC in setting guidelines for corporate disclosures on climate change, and they largely have been.”