Chevron, ConocoPhillips and other oil and gas interests are asking the US Securities and Exchange Commission (SEC) to take a flexible approach in a pending rule that could broaden what publicly traded companies have to disclose about their climate-related risks.
Those companies, in recent feedback to the SEC, are pushing to retain flexibility for companies to determine what type of climate information is "material" to investors and must be disclosed. The industry also wants regulators to consider building on existing voluntary climate disclosure frameworks, while not putting strict liability on executives for climate-related information they disclose.
That feedback could be important as the SEC begins to reconsider rules that have largely left it up to publicly traded companies to determine what, if any, climate information they disclose to investors. The SEC asked for public input on the issue by 13 June, as it works to formally propose a rule by October that would "enhance" disclosure on climate-related risks and opportunities.
Chevron, in its formal input to the agency, said climate disclosures should take advantage of existing reporting standards, such as a program at the US Environmental Protection Agency that requires industry to report on greenhouse gas emissions from large facilities. The company said the SEC should also retain its existing approach for companies to have the flexibility to decide what disclosures are material to investors, while using a "phased approach" for instituting sustainability-related disclosures.
"This would allow the commission to focus first on those topics it deems of most importance, such as climate change disclosures," the company wrote on 11 June.
ConocoPhillips in separate comments filed the same day pitched a "hybrid approach" on climate disclosures to the SEC. Some standards could be uniform to help investors compare climate data, the company said, while another set of standards would offer flexibility for companies to decide what needs to be disclosed.
"E&P companies face different risks and opportunities than do fully integrated companies that market consumer products," ConocoPhillips wrote.
Oil and gas groups are urging the SEC to carefully weigh what types of new disclosure changes are warranted. The American Petroleum Institute (API) said it remains unclear what information was "broadly needed" by investors and said new reporting would impose costs disproportionately affecting smaller companies. The trade group also cited concerns that expanding disclosure rules could exceed SEC's authority and raise concerns under the US Constitution.
Furnish vs File
"A significantly expanded disclosure requirement beyond the well-established doctrine of materiality could raise serious First Amendment issues," the trade group said.
The oil and gas sector also wants climate information to be "furnished" to the SEC, a standard that would avoid the strict legal liability that applies to "filed" information such as those affecting financial performance. API said letting companies furnish this information would allow them to expand their climate information and offer more context, particularly because climate-related risks are likely to be qualitative.
Democratic-led states and environmental groups are pushing the SEC to mandate robust disclosure of climate information, which they say would allow investors to understand their risk exposure to climate change and better understand which companies have plans for curbing their emissions.
"Transparency about whether and how companies are addressing climate change is essential for investors, retail or institutional, to make smart decisions about where they put their money," said California attorney general Rob Bonta, who led a coalition of a dozen attorneys general in filing comments to the SEC.
