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On March 21st, 2022, the Securities and Exchange Commission (SEC) proposed a massive rule change requiring all publicly traded companies to vastly increase their climate-related disclosure. The proposed rule changes will require disclosure of direct greenhouse gas (GHG) emissions (Scope 1 emissions), and indirect emissions associated with the purchase of electricity, heat, cooling, or other forms of energy (Scope 2 emissions). Additionally, select companies will be required to disclose indirect GHG emissions generated along a company’s value chain (Scope 3 emissions), if it is deemed material or if the company has set scope 3 emission targets for itself.
Beyond the disclosure of emissions data, the proposed rule would require disclosure of processes for identifying, assessing, and managing climate-related risks, including the likelihood of impact on consolidated financial statements over medium or long-term time horizons. Lastly, the rule will require the identification and disclosure of climate risks on the company’s business model, strategy, and outlook.
Reaching fresh peaks on multiple occasions throughout 2021, sustainable investing has been a key financial trend over the past few years. Investors are allocating their money in a number of different responsible manors from green bonds, to opportunity zone, to sustainable funds and ETFs, however, until now, it has been difficult to measure the impact of investments in the capital market. With the new proposed rule, one of the most important impact metrics (emissions data) will be publicly disclosed and available to prove the emission impact of your investments; investors will be using this data to tell a whole new story of investment returns. The newly released information will be widely desired, abundant, but difficult to aggregate.
There will be a race to see who can gather this data most effectively and efficiently, however, some data companies have positioned themselves ahead of this regulation preparing themselves for the inevitable release of such data. Physis has spent years perfecting our data analysis processes ensuring that among the release of companies’ emissions data, we will be ready to display the information investors require without spending hours sifting through reports.
As climate-related disclosure becomes the new normal for publicly traded companies, investors will be expected to provide emissions analysis for any portfolio and any client. This level of emissions information could prompt a new wave of sustainable investors as people grow curious about other sustainability metrics in their portfolios.
Physis has ethical investors covered, our platform can provide live data from the day of your first investment for over 30 different impact indicators across 10,000 companies and 355,000 funds! Our platform is helping investors to build sophisticated sustainable portfolios customized to fit their client’s individual needs, as well as, prove the impact their portfolio is having on the planet through transparent and understandable data. We also tell investors the different sustainable product and service offerings among the companies within their portfolio, UN Sustainable Development Goal (SDG) alignment, and controversial activities data.