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Investors should target companies engaged in disclosure frameworks, says CSE

Regulators concerned firms are failing to provide investors with adequate climate information, according to the sustainability specialist

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  • Written by  Banking Exchange staff
Investors should target companies engaged in disclosure frameworks, says CSE

US regulators are increasingly focused on disclosure activity and the Securities and Exchange Commission (SEC) is intent on accelerating mandatory disclosures on climate-related matters, according to the Center for Sustainability and Excellence (CSE).

In preparation, investors who have made net-zero commitments should invest in companies engaged with the investment community and with disclosure frameworks.

According to the sustainability specialist, the SEC is concerned about firms failing to provide investors with the right information so they can assess whether pledges are truly being met.

The current voluntary framework fails to secure consistent, comparable and reliable data, the firm said in a statement.

But with mandatory disclosures expected to come into force in the US sooner rather than later, companies need to start adjusting their disclosure procedures now.

Listed companies in particular should be preparing for pending regulatory action.

Non-profit business membership organisation The Conference Board recently published a report that revealed large firms disclose greenhouse gas emissions at 2.5 times the rate smaller firms do.

Companies that have not been addressing climate, diversity, and other key sustainability issues in their public-facing communications should take a fresh look at whether to do so,” said Thomas Singer, principal researcher at The Conference Board ESG Center.

“More and more, these disclosures are expected by key stakeholders who can influence the company's reputation and bottom line,” he added.

Meanwhile in December the Financial Stability Oversight Council (FSOC) revealed in its latest annual report that climate-related financial risk was one of its top priorities.

The report also encouraged financial regulators to promote consistent disclosures that clarify financial risk for investors and add transparency to investment and lending decisions.

Environmental campaigners and activists investors have kicked off 2022 by emphasizing the need for companies to disclose their greenhouse gas emissions, but also those generated by their partners and suppliers.

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