Latest News on Sustainability and Environmental Issues
With SEC and EU reporting requirements also expected, some companies are waiting to see the differences as they plan strategies
By
Follow
July 7, 2023 1:22 pm ET
While finance chiefs generally welcome recent international guidelines for corporate sustainability disclosures, some are still waiting to see how other sets of requirements develop as they plan their strategies.
The requirements from the International Sustainability Standards Board, released in June after more than a year and a half of development, aim to set a global baseline for sustainability-related disclosures. But the U.S., through as-yet-unfinished Securities and Exchange Commission rules, is expected to take a softer touch following pushback from investors, companies and lawmakers, The Wall Street Journal reported. The European Union, meanwhile, may require more disclosures from U.S. companies.
“There are lots of different efforts afoot, and while there’s also cooperation, generally speaking, or collaboration, across these different standards-setting bodies, there’s no one process and there’s no one uniform rule,” said Debbie Clifford, chief financial officer at software company Autodesk.
One challenge for the San Francisco-based business is determining how the ISSB standards compare with what may come from the SEC and the EU. “The types of questions that come to my mind are, ‘OK, well how is this going to then cross reference to what we may ultimately see coming from the SEC?’” Clifford said, referring to the ISSB rules. “As a U.S. publicly listed company, we’re concerned about all of this disclosure regulation, but the SEC is our primary regulator, and so we must comply there.”
This means CFOs and other executives are hesitant to move too quickly and go further than required or have to backtrack to comply with a patchwork of requirements. Companies expressed concerns as the ISSB’s standards were being developed about revealing information that could put them at a competitive disadvantage as well as about complications related to reporting on Scope 3 emissions, which include those from suppliers, in addition to their own emissions.
Top among executives’ concerns is how the ISSB’s rules will interact with requirements from others around the globe. One ISSB rule requires companies to disclose significant climate-related risks, such as floods and other extreme weather events. Another establishes requirements for disclosing information on how companies manage, measure and monitor certain sustainability risks and opportunities. Individual countries and jurisdictions can choose to adopt the ISSB’s standards, which would make them binding for companies in those areas, with reporting potentially starting as early as 2025.
The ISSB has worked closely with authorities from the U.S., China, Japan, the EU and the U.K., and with the International Organization of Securities Commissions, to develop its rules as a global baseline and work on how the rules interact with those from others. So far, Australia, Canada, Japan, Hong Kong, Singapore and the U.K. are among the major countries that have indicated they would consider using the ISSB standards. Many others are expected to adopt the new guidelines, and companies can voluntarily adopt the standards.
Autodesk executives are evaluating how the ISSB’s standards, as well as reporting requirements from the EU, connect with how the company is preparing for SEC disclosure requirements, Clifford said. “[W]e just have this big body of work, marching towards an outcome that we know is coming, but all the details of that outcome are not refined at this point,” she said.
Meanwhile, finance chiefs outside of the U.S. are reviewing the ISSB’s standards with other disclosure developments in mind. U.K.-based engineering company Smiths Group has at least five disclosure frameworks to potentially follow, said CFO Clare Scherrer. They include rules from the Task Force on Climate-Related Financial Disclosures, the Transition Plan Taskforce and the ISSB, which the company is looking over, Scherrer said.
“You have to plan for the highest bar, because if you’re going to, if you can hop over the highest bar, then you should be OK on other things,” she said. “But…we just don’t know how it’s going to evolve.”
The CFO of Mars Inc. said the ISSB’s standards are an important step toward a global baseline, but the food manufacturer would find it “simpler” to have one set of globally aligned sustainability reporting standards. PHOTO: ORLIN WAGNER/ASSOCIATED PRESS
Privately held companies, which can voluntarily adopt the standards, are also keeping an eye on the variety of disclosure requirements. Mars Inc. finance chief Claus Aagaard said the ISSB’s standards are an important step toward a global baseline, but the McLean, Va.-based food, candy and pet food manufacturer would find it “simpler” to have one set of globally aligned sustainability reporting standards.
“Given the unlikelihood of that scenario, the best alternative is a global baseline for investors that can be built upon with disclosures for other stakeholders,” Aagaard said. “We’ll be evaluating the final standards and paying close attention to adoption and related requirements in countries where we operate.”
CFOs are also focused on disclosures regarding Scope 3 emissions. Digital infrastructure company Equinix voluntarily discloses on Scope 3 emission targets and is investing to meet developing disclosure requirements, according to CFO Keith Taylor. This includes, he said, adding up to 12 people in the Redwood City, Calif.-based company’s six- to seven-person sustainability program office in the coming months.
“Scope 3 is the tough one,” said Taylor. “We’re building systems and processes that can allow us to capture information in a way that will help us respond to the needs of the regulatory community, the needs of our customers, the needs of the social environment in which we operate.” Recognizing the challenges, the ISSB gave companies an exemption of one year for reporting on Scope 3 emissions.
Ultimately, Taylor said he is encouraged by the ISSB’s standards. “It’s very, very
Compiled by: Raana Imtiaz Khan
Exclusively for “theGreenimpactReport”
Courtesy of: WSJ
Member
Twitter: @RaanaImtiaz
https://www.linkedin.com/in/raana-imtiaz-khan-668878/
The most recent information and updates on supportability, natural mindfulness, and green living can be found on The Green Effect's News page.
Our team of experts keeps an eye on the most recent developments in sustainable living—from technological advancements to policy shifts—and shares them with you here. Our goal is to keep you informed about the most recent and relevant
environmental news so that you can make well-informed choices about your day-to-day activities and join the global movement toward a sustainable future.
On this page, you can anticipate finding a wide variety of sustainability-related blog posts and articles, including:
Changes in the environment and the effect they have on it Sustainable energy sources Eco-friendly goods and services Maintainable agriculture and food production. Reducing waste and reusing it Green transportation Preservation and natural life security Natural approach and regulation We also provide insight into the most recent trends in sustainable design, eco-travel, and green innovation. We try to keep our readers up to date on the most recent sustainable living innovations and developments.
At The Green Impact, we are committed to promoting a sustainable and environmentally friendly lifestyle. Visit our News page if you want to keep up with the most recent sustainability-related news and trends.
So, whether you are an experienced environmentalist or just starting out in your research into sustainable living, we hope that you will find our news page helpful and informative. Be a piece of the answer for a superior future by tuning in for normal
updates!
Shareholders at Chevron and Exxon Mobil struck down proposals urging the oil companies to cut emissions
An investor-driven climate change push at some of the world’s largest oil companies has stalled out.
On Wednesday, Exxon Mobil XOM 0.82%increase; green up pointing triangle and Chevron’s CVX 0.80%increase; green up pointing triangle shareholders struck down a raft of proposals urging the companies to cut greenhouse-gas emissions derived from fuel consumption, put out new reports on climate benchmarks and disclose certain oil-spill risks, among other initiatives.
The votes were abysmal for climate activists. All but two of the 20 shareholder proposals for the two companies garnered less than 25% of investors’ vote, according to preliminary results, with some performing much worse than similar proposals put forward last year.
Among the most controversial proposals were those that would have had the companies adopt targets for reducing emissions including those from third-party consumption of their products, such as when drivers burn gasoline in their cars, also known as Scope 3 emissions. Those received only 11% and 10% of the vote among Exxon and Chevron investors, respectively, compared with 27% and 33% for similar proposals last year.
In recent weeks, similar climate proposals failed to win over most shareholders at annual meetings of British oil and gas giants BP and Shell in London.
Investment strategies linked to ESG, short for environmental, social and corporate-governance issues, had gained momentum in recent years, particularly following the onset of the pandemic in 2020. Investors pressed oil companies to show how they were working to reduce their climate footprint, set long-term environmental goals and curtail the flaring of unwanted natural gas.
In 2021, investment firm Engine No. 1 prevailed in a historic proxy battle against Exxon, winning three board seats at the company’s annual meeting with the backing of investment firms, Vanguard, State Street and BlackRock. The firm argued that Exxon needed to form a better strategy to prepare for the world’s anticipated energy transition.
After the defeat, Exxon adopted a so-called net zero commitment—a goal to reduce or offset greenhouse-gas emissions from its operations to zero by 2050.
Investors in recent years urged oil companies to set long-term environmental goals. PHOTO: NITASHIA JOHNSON FOR THE WALL STREET JOURNAL
But Wednesday’s votes demonstrated how some shareholders have backed off pushing major oil companies to embrace certain climate goals. Investors said many voices pushing ESG measures have been drowned out following Russia’s war in Ukraine, which caused oil and gas prices to skyrocket as global supplies were crimped.
Mark van Baal, founder of environmental activist group Follow This, said shareholders missed an opportunity at the annual votes. Investors know that avoiding climate disaster will require global emissions to fall by almost half by 2030, he said, but many are focused on short-term profits.
“It’s incomprehensible that most investors still accept the U.S. super majors’ refusal to cut emissions this decade,” van Baal said.
The industry and its allies have said some countries, particularly in Europe, were too quick to move away from fossil fuels toward clean energy sources such as solar and wind. A movement against climate activism has gained political traction in the U.S., particularly among Republican voters. Entrepreneur Vivek Ramaswamy, a candidate for the Republican presidential nomination, has made anti-ESG policies a central plank of his campaign.
The pushback against ESG measures has also hit investment firms such as BlackRock, which have faced potential boycotts in Texas and other red states. Republican officials in Florida, Texas, Louisiana and South Carolina pulled more than $4 billion in pension and investment funds from BlackRock starting last year. BlackRock brought in $230 billion from U.S. clients in 2022.
It wasn’t immediately clear how BlackRock, State Street and Vanguard voted at the meetings this week.
State Street and BlackRock declined to comment. Vanguard didn’t immediately respond to a request for comment.
Investments in fossil fuels pushed many oil companies to record profits last year, which lured back some investors who had fled after years of meager returns from the industry. Exxon Chief Executive Darren Woods said Wednesday the company had benefited from investing in fossil fuels when others pulled back.
Even in Europe, energy executives have shown a willingness to alienate clean-energy investors to tailor strategies to the thirst for fossil fuels. BP and Shell’s record full-year 2022 profits and hefty returns to investors have attracted new investors, and won back some who were dubious of their energy-transition strategies, executives said.
Shell and BP executives have said their strategies are consistent with targets to lower global emissions, while also helping supply the oil and gas still demanded in coming years globally. Exxon and Chevron have said they support the emissions targets set by the Paris climate accords and reducing emissions from their operations.
But Woods and other industry executives have argued some climate-related proposals would backfire or leave the economy worse off. Woods said several proposals rejected Wednesday would have required the company to assume the world will cut carbon emissions at a much faster pace than observers have projected.
“Some [would] go so far as to force us to decrease oil and gas development,” he said. “This would do nothing to reduce global demand.”
Compiled by: Raana Imtiaz Khan
Exclusively for “theGreenimpactReport”
Courtesy of: WSJ
Member
Twitter: @RaanaImtiaz