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Calvert calls for improvements to SEC climate proposals

The firm is overall supportive of the regulator’s plans

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  • Written by  Banking Exchange staff
Calvert calls for improvements to SEC climate proposals

Calvert Research and Management has called for improvements to be made to the SEC’s sustainable finance related proposals.

The firm, part of Morgan Stanley Investment Management, has suggested more disclosures could be made around targets and goals.

Calvert’s preference is for registrants to disclose global, entity-level targets and goals, both long-term and interim, and covering both Scopes 1 and 2 emissions.

This could also extend to Scope 3 if companies are required to disclose Scope 3 emissions.

Despite this, the firm was supportive of the SEC’s proposals, with Calvert CEO and president John Streur writing they could: “lead to decision-useful, comparable climate-risk information for investors.”

Calvert also suggested the request for further information supportive of the disclosed target implementation. The firm cited a current lack of disclosure around measurement, implementation and progress details.

This information includes interim targets, how the targets will impact the financial statements, and how the targets will align with issuers’ continued use of existing assets.

This information could help determine how a company compares to its industry or regional peers in this area, the firm has argued in its response.

Additionally, Calvert highlighted that the proposed rule has the potential to deter registrants from setting climate-related targets due to the need to disclose them.

Calvert warned that this may have the unintended effect of deterring companies from constructively engaging with investors on appropriate target-setting.

“We believe this can be easily resolved if the rule introduces a ‘comply or explain’ requirement for climate-related targets,” Streur added.

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