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IPA Calls on the SEC to Adopt Five Important Changes to Its Climate-Related Disclosure Proposal and works with Industry Coalition to Adopt Additional Recommendations


The U.S. Securities and Exchange Commission’s (SEC) rulemaking regarding climate-related disclosures has been one of the most closely watched, hotly debated and potentially impactful regulatory efforts the Commission has undertaken during this administration.

Since the proposal’s introduction, the IPA has worked closely with our industry to educate SEC commissioners and staff on the effect the proposal would have on portfolio diversifying investments (PDIs) as well as to advocate for reasonable changes to the potential regulation.

On Friday, the IPA submitted its to the SEC which laid out five recommendations for modifying and improving the proposal.

The IPA called on the Commission to adopt the following changes on behalf of the PDI industry:

  1. Make all Scope 3 GHG emissions disclosure by public, non-listed real estate investment trusts and business development companies voluntary;
  2. Clarify that the materiality standard for Scope 3 emissions comports to the time-tested understanding of “materiality” under the federal securities laws;
  3. Allow for all of the disclosure to be furnished, not filed, in a separate report rather than in a Form 10-K;
  4. Implement a deadline for submission of this separate report later in the year, after GHG emissions and climate data is typically made available;
  5. Adopt a forward-looking statement safe harbor that is applicable to all registrants required to disclose climate-related information, including direct participation investment programs.

On June 13, the IPA also joined a separate r along with 10 other industry trade organizations. That comment letter made the following recommendations:

  • Delay most of the proposed compliance deadlines by at least a year and the related Scope 3 emissions compliance deadline by at least two years;
  • Abandon the 1% line item disclosure thresholds in favor of the SEC’s own recent Regulation S-K reforms for “materiality-focused” and “principles-based” discussions in Form 10-K’s MD&A;
  • Allow the incorporation of “actual, determined” Scope 1 and Scope 2 emissions data in the first filing for which they are available;
  • Limit mandatory Scope 3 disclosure and allow registrants to furnish rather than file Scope 3 emissions data; and
  • Strengthen the proposed Scope 3 safe harbor and extend these safe harbor protections to Scope 2 disclosures as well.

Our goal is to ensure that any final SEC rule provides investors with decision-useful information while not creating unnecessary implementation burdens for registrants.

We will continue to provide timely updates as the SEC considers comments on the proposal and works towards a final rule.

Thank you for your continued support,

Anya Coverman
SVP, Government Affairs and General Counsel
Institute for Portfolio Alternatives