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CalSTRS Calls for US SEC to Get Tougher on Scope 3

All US publicly-listed companies should be required to disclose their Scope 3 emissions, according to the California State Teachers’ Retirement System (CalSTRS). The educator-only pension fund was responding to the recently-closed consultation on a climate-related financial disclose framework that has been developed by the US Securities and Exchange Commission (SEC). The current recommendation in the proposal is for Scope 3 to be included in reporting only if determined to be “financially material” or if Scope 3 emissions have been included in the company’s decarbonisation targets. CalSTRS noted that 60% of companies in its investment portfolio don’t report their emissions, resulting in “incomplete and inconsistent data” hampering the fund’s ability to more efficiently allocate capital to lower climate risk assets, analyse the progress of companies’ emissions reduction commitments, and assess corporate climate-related impact. Aeisha Mastagni, CalSTRS’ Sustainable Investment and Stewardship Strategies’ Portfolio Manager, said: “While the SEC’s proposed climate disclosure rules would provide more reliable, consistent and comparable information to investors, inclusion of all company emissions would provide a level playing field for investors to better understand how climate impacts risk and return across our global investment portfolio. All companies – not just energy companies – must take steps to address climate change while creating long-term value, and the consistent and reliable disclosure of greenhouse gas emissions is a crucial step toward efficiently managing a complex global portfolio of 9,000 companies.”

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