CalSTRS wants the SEC to strengthen its proposed climate disclosure rules for public U.S. companies, the $314.8 billion pension fund said in its formal comment submitted to the Securities and Exchange Commission.
Roughly 60% of companies and assets in the CalSTRS investment portfolio do not report greenhouse gas emissions, officials at the California State Teachers' Retirement System, West Sacramento, in a June 17 comment letter.
CalSTRS is asking the commission to include disclosure of Scope 3 emission disclosures for all public companies. Scope 3 emissions are assets that while not owned by the company are assets that the organization indirectly impacts in its value chain.
The proposed rules as currently written only require disclosure of Scope 3 emissions from companies that reference Scope 3 greenhouse gas emissions in targets or determine Scope 3 emissions to be financially material. The proposal also requires disclosure of public companies to disclose Scope 1 (direct) and Scope 2 (indirect) greenhouse gas emissions.
"Scope 3 emissions give investors important signals about the decisions corporate managers make in day-to-day business," CalSTRS said . These include how a company's product portfolio and design can meet customer demand and market expectations for low-carbon solutions, how much business travel is required to generate revenue, and whether most employees commute to work or work remotely.
"We own nearly 9,000 companies across the value chain representing interconnected business relationships upstream and downstream from each other," the letter said. Scope 3 information would help CalSTRS officials measure its total portfolio emissions as it works to meet its net-zero portfolio goal.