Examples of carbon dioxide emissions reporting by public cement, concrete and aggregate producers accompany an overview of the U.S. Securities and Exchange Commission-proposed “The Enhancement and Standardization of Climate-Related Disclosures for Investors” rule (pages 12-13). Through guidance detailing environmental metrics, operators like Charah Solutions, Holcim Ltd., Summit Materials and Vulcan Materials rise to a familiar position: Ahead of the regulatory curve and responsive to market demands—the signals that matter most.
“Climate-Related Disclosures” would require a company registering with the SEC to provide information about “risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition.” The rule states: “It is squarely within the Commission’s authority to require such disclosure in the public interest and for the protection of investors because climate-related risks have present financial consequences that investors in public companies consider in making investment decisions.”
From a brief review of a small set of reports or disclosures, cement, concrete and aggregate operators are pacing key SEC-proposed requirements, most notably Scope 1, 2 and 3 category CO2 emissions reporting. The GHG Protocol Corporate Accounting and Reporting Standard, which influences “Climate-Related Disclosures” as well as the Environmental Product Declarations cited frequently here and in our regular industry coverage, delineates the categories:
- Scope 1. Emissions from operations that are owned or controlled by the reporting company.
- Scope 2. Emissions from the generation of purchased or acquired electricity, steam, heating or cooling consumed by the reporting company.
- Scope 3. All indirect upstream and downstream emissions beyond Scope 2 that occur in the value chain of the reporting company.
In contrast to an Environmental Protection Agency or Labor Department rulemaking that might draw perspective from many companies and industry organizations, the SEC public portal shows primarily individuals commenting on “Climate-Related Disclosures.” A few commenters offer perspective on how “Climate-Related Disclosures,” if adopted, might affect target companies and their investors.
The Carbon Neutral Coalition of Texas, whose members aim to shape the future of fossil fuels and strive for carbon neutrality by 2050, opposes the Scope 1, 2 and 3 emissions reporting provisions, with emphasis on the latter category: “To address climate-related risks, the answer is not more regulation and reporting but instead the adoption of carbon capture technology, storage, and the utilization of captured carbon to create new products … including carbon dioxide[-dosed] concrete and carbon free steel.” The SEC should likewise recognize the upside for public companies engaging in such activities.
Proposed-rule critic Andrew Vollmer of the Mercatus Center at George Mason University, Virginia, contrasts the SEC’s traditional role versus the one painted in “Climate-Related Disclosures.” The agency has a served as “a technical regulator of securities markets to publicize standard corporate operational and financial information bearing on the value of securities, patrol for material misrepresentations and unfairness to investors, facilitate the discovery of prices for securities, and improve the efficiency of stock exchanges,” he observes. “Mandating detailed disclosures on the single subject of climate change would use the SEC and securities laws as instruments to advance a divisive and contentious public policy not approved by Congress.”
The precedent set in adopting the rule needs to be considered in light of successor prerogatives, he contends, suggesting, “A future commission could compel specialized disclosures about, for example, the costs of compliance with government regulations.”
A public comment period for such a proposal would match or exceed “Climate-Related Disclosure” in spirited dialog, while reminding many taxpayers that elections have consequences for financial matters beyond the kitchen table.