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SEC Commissioner Caroline A. Crenshaw spoke to the "existential threat" climate change poses to the capital markets, and the need for "decision-useful metrics" to monitor and measure corporate commitments to net-zero emissions.
In remarks before the Center for American Progress and Sierra Club, Ms. Crenshaw commended the many public companies committed to net-zero emissions. She asserted that net-zero emission pledges "underscore the loud, repeated, and sustained calls for decision-useful metrics." However, she expressed uncertainty about how companies will achieve their goals and how investors will be able to measure and monitor the effectiveness of these pledges.
Ms. Crenshaw added that other corporate disclosures, such as political spending and corporate governance, also require "accurate and reliable" metrics to ensure that executives are spending shareholder money in a manner that is consistent with their public statements. She outlined similar obstacles in the private markets, where she said the SEC has "significantly less visibility."
Commentary
Commissioner Crenshaw taps into a growing concern regarding the lack of clear guidelines and accountability for sustainability pledges. Regulators and investors alike struggle with "greenwashing" - a trend where companies appeal to investors and customers by alleging sustainability initiatives without making consequential changes to their business.
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