Leave your email to get exclusive discounts
As of August 16th, 2022, President Joe Biden has officially signed the Inflation Reduction Act. Part of this new law approves almost $370 billion worth of climate-focused investments primarily focused on renewable energy generation and decarbonization. Some key allocations of the funds include $60 billion to manufacturing clean energy and clean transportation, $30 billion in electric utilities assisting the transition to clean energy, $27 billion to supporting the deployment of technology to reduce emissions, and more. Separately, an additional $60 billion was dedicated to stimulating underprivileged communities.
There is a clear impetus for the transition to a carbon-neutral economy and this law will act as a mere piece of a far more complex puzzle. However, it is an important step in the right direction.
Sustainability has been a normal theme in recent news, from the SEC’s sustainable investment reporting rules to the SEC’s carbon disclosure regulation, and now the Inflation Reduction Act. Although it may just look like an initiative to help achieve the carbon neutrality goals, this law further backs the SEC’s recent propositions, and this may be more important than many realize.
The comment period for the SEC’s carbon disclosure regulations was very underwhelming until the final day’s when notable corporations such as Nasdaq and Blackrock published complaints about the proposed regulations. They cited numerous concerns and suggested an ‘Explain or Comply’ solution instead. This raised many eyebrows but SEC did not give up any ground. Now, as the government further backs climate-related initiatives, there is likely nothing that can be done to stop the SEC from solidifying its proposed rules.
As the United States regulatory bodies continue to push for sustainable advancement, it is likely that the aforementioned initiatives are just the beginning. The SEC remains keen on holding all companies accountable for their business operations, and the government has taken the initiative to stand by its pledge to a more sustainable future.
In the coming years, corporations can expect to get acquainted with the idea of reporting on their sustainability. Furthermore, financial institutions will have to show proof of their ‘sustainable investments’ beyond a basic ESG score. It is certain that the incoming changes will take some adjusting, but it should result in a much healthier planet in the long-run.
The Physis Platform is a software that helps institutional investors build and report on more sophisticated sustainable portfolios.
Set up a demo today to find out how we can help you invest sustainably.