BlackRock cautions SEC against deviating from TCFD recommendations
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The Securities and Exchange Commission’s (SEC) proposed climate disclosure rules should refrain from going beyond the recommendations of the Task Force for Climate-related Financial Disclosure (TCFD), according to a BlackRock comment letter.
In the fund manager’s June 17 letter to the U.S. regulator, it expressed “concern” that straying beyond TCFD expectations may “decrease the effectiveness of the Commission’s overarching goal of providing reliable, comparable, and consistent climate-related information to investors.”
In particular, BlackRock called on the SEC to tie proposed disclosure requirements pertaining to climate-related strategy to materiality, including internal carbon pricing, scenario analyses, and transition plans.
The SEC should also further align its policy with TCFD recommendations by “permitting issuers to disclose only relevant information, rather than mandating disclosure against each prescribed element, as would be required under the proposal,” BlackRock said.
The fund manager also questioned the SEC’s decision to require issuers to disclose Scope 3 emissions, derived from assets in a company’s value chain, where material. Instead, BlackRock proposed the SEC seek Scope 3 emissions reporting on a “comply or explain” basis.
“We do not believe the purpose of Scope 3 disclosure requirements should be to push publicly traded companies into the role of enforcing emission reduction targets outside of their control,” the letter reads. “We encourage regulators to adopt a disclosure framework that accounts for this significant variation.”
In line with this, the SEC should also adopt a liability framework that “provides meaningful protection from legal liability for disclosures provided in good faith while standards continue to evolve.”
Investor letters to the SEC about its proposed climate disclosure rules have largely been supportive of the proposed policy, but remain divided in regards to whether Scope 3 emissions reporting should be mandatory.
Recent letters from the California State Teachers’ Retirement System (CalSTRS), the New York City Comptroller, and the Interfaith Center for Corporate Responsibility (ICCR) urged the SEC to make Scope 3 emissions reporting mandatory.