More Investors Back SEC Disclosure Rules

Most retail investors support the Securities and Exchange Commission’s (SEC) proposed new rules forcing climate disclosures on listed companies.

Seven in 10 investors polled by Embold Research in March this year said they supported the regulator’s move, announced March 30.

Embold carried out the research on behalf of Americans for Financial Reform Education Fund and Public Citizen. The two organizations said in a statement that the results showed “investors and the public want… more standardized information about companies’ growing climate financial risk”.

The survey also found that, while only 36% of investors said they trusted voluntary climate disclosures, 58% would trust those made to the SEC. When disclosures were validated by a third party, 71% of investors said they would trust them.

Most investors indicated they would use the information in their decision making if facilitated by the SEC. Nearly two thirds (63%) said they would factor in climate-related financial risk information if it was audited and disclosed to the SEC. In addition, 58% said they would use information about risks and opportunities if it was “standardized, free, and easy to find”.

Investors aged 18-34 — those with the longest time horizons — were among the groups most likely to use climate-related information, the research found.

More than three quarters of all investors surveyed (78%) agreed that, if a company committed to net-zero emissions targets, all information regarding these targets, including metrics used and progress reports, should be made publicly available.

Americans for Financial Reform Education Fund and Public Citizen said in a joint statement that “the current practice of relying on companies’ voluntary climate disclosures is inconsistent, inefficient, and costly”.

“It is the SEC’s duty to make sure this information is freely available to all investors and the public, not just large financial institutions with vast resources,” the organizations said. “A mandatory disclosure regime is important for promoting investor protection, fair and efficient capital markets, and capital formation.”

The SEC intends to require listed companies to disclose climate-related financial information if it is “reasonably likely to have a material impact on their business, results of operations, or financial condition”. Information disclosed could include Scope 1 and 2 carbon emissions.