BlackRock, which embraces climate-conscious investing and is pushing other companies to do the same, still supports the rules proposed by the SEC requiring climate-related disclosures from public companies. But the money manager has some notes for the regulator.
In a June 17 letter to the SEC, BlackRock reiterated its belief that "climate risk is investment risk" and that related disclosures aligned with the Task Force on Climate-related Financial Disclosures framework should be mandated. However, the firm does not agree with how the SEC has proposed that companies make those disclosures.
"We are concerned that certain elements of the proposal, which go beyond or differ from the recommendations of the TCFD, will decrease the effectiveness of the Commission's overarching goal of providing reliable, comparable, and consistent climate-related information to investors," BlackRock wrote in the letter.
Investors want climate-related information about companies, but the availability and quality of that information varies widely.
It is reasonable to ask companies to report their own impact on the climate, such as their own greenhouse gas emissions, BlackRock said. And the asset manager says its climate-related reporting is aligned with the recommendations of the TCFD.
Requiring public companies to also disclose the impact of their partners presents a huge challenge, BlackRock said. It might be expensive or impossible for partners — many small, private companies — to meet the same regulatory standards the SEC would set for public companies. Public companies could then become unfairly liable for how other businesses operate and even disincentivize private companies from going public, decreasing choice for public market investors, BlackRock's letter said.
Instead of requiring public companies to file a 10-K for all climate-related disclosures, BlackRock suggests that companies be required to file a new "furnished" report, or a form that would limit liability. It would also give companies the "flexibility necessary for continuing development of creative, pragmatic best practices" as better climate-related information becomes available.
The comment period for the proposal ended June 17. Now, the SEC will consider any feedback and decide whether to change the proposal or vote on a final rule.
Beyond its letter, BlackRock declined to comment further about changes it would like the SEC to make to the proposed rules.