New climate disclosure rule designed to create transparency

The Securities Exchange Commission, in a 3-to-1 vote, has given initial approval of a rule that would require all public companies to report on the climate-related impact of their businesses.

“The SEC is doing this, not just as a climate activist organization, but from an investment, risk-management perspective to make sure those who are investing in companies have enough information to determine how they are going to deploy capital,” said Tyler Cole, director of supply chain intelligence at FreightWaves. “The reality is that when we don’t have the transparency from well-operated companies, we can’t hold them accountable.”

This new rule would create a whole new level of transparency, giving investors and stakeholders more leverage in terms of the risk that comes with doing business with companies that are participating in practices that are harmful to the climate. This would hold these companies responsible for their role in climate change and would exclude the ability to “cherry-pick” what they do report. 

Those who oppose this new sustainability rule argue that it is outside of the SEC’s jurisdiction and would force companies to spend more company time reporting unnecessary information, what many are calling “immaterial risks.” 

“Think how terrible it would be if we stopped investing in freight and moving goods. We would have a lot of unintended side effects similar to what we have seen from the pandemic disruption — everything that happens when you stop moving goods,” Cole said.

Because transportation is responsible for about 29% of U.S. greenhouse gas emissions, the freight industry will likely see the largest impact of these new reporting regulations. 

“If there is a potential policy in place that’s going to require large firms to report their emissions, people are going to start putting a big microscope on how big their freight footprint is,” Cole said.