 Hello and good morning. Welcome to our briefing, what Congress needs to know about corporate climate risk, resilience, and disclosures. I'm Dan Bressette, Executive Director of the Environmental and Energy Study Institute. The Environmental and Energy Study Institute was founded in 1984 on a bipartisan basis by members of Congress to provide science-based information about environmental, energy, and climate change topics to policymakers. More recently, we've also developed a program to provide technical assistance to utilities in rural areas interested in on-bill financing programs for their customers. ESI provides informative, objective, non-partisan coverage of climate change topics in briefings, written materials, and on social media. All of our educational resources, including briefing recordings, fact sheets, issue briefs, articles, newsletters, and podcasts are always free online at www.esi.org. If you'd like to make sure you always receive our latest educational resources, just take a moment to subscribe to our bi-weekly newsletter, Climate Change Solutions. It honestly feels like forever since our last briefing. It was all the way back on July 25th, when we hosted the 2022 Congressional Renewable Energy and Energy Efficiency Policy Forum. There's this insidious myth that August is somehow the quiet part of the year in Washington and most of the days that have passed since our policy forum were in August, of course, but August was anything but slow this year. So tell that to the people who brought us the Inflation Reduction Act and help to keep all of us very, very busy. Everybody who works in climate policy spent August very, very busy. We focused on Inflation Reduction Act related news and analysis in our latest issue of our bi-weekly newsletter, Climate Change Solutions. If you're not subscribed, I really encourage you to do that. It's the best way to keep up with everything, and we've been producing a lot of really great resources about the IRA and all of the different programs and investments that it provides. There's a lot to like in the Inflation Reduction Act, but it also leaves a lot left to do. So here we are back to briefings to raise awareness and share information about all that remains to be done to meet our Paris Agreement goals and to do so in an equitable way. In addition to this briefing, next week we will host a panel about climate action in K-12 schools, and then we'll ramp up our coverage of issues related to COP 27, the UN Climate Negotiations. We will have four briefings about what Congress needs to know about COP 27 in October, or as I like to call it, COP October, about key findings from the sixth assessment report, natural climate solutions, loss and damage, and the negotiations themselves and what to expect. Last year, we'll also publish a Congress-oriented daily newsletter during COP 27. I hope you'll visit us online at www.esi.org to RSVP for the briefings and sign up for the newsletter. Our briefing today is all about what Congress needs to know about corporate climate risk, resilience, and disclosures. Climate change poses significant financial risks, such as increasingly frequent and severe weather that disrupts supply chains, destroys valuable infrastructure, and decreases labor productivity. To begin accounting for this risk, the Securities and Exchange Commission recently proposed a rule that would require publicly traded companies to disclose their climate-related risks and report their greenhouse gas emissions. We're currently in a period between the proposed rule and the next action by the SEC, which is currently working through the mountain of public comments on the proposed rule. While climate change is a very serious threat, there are also many opportunities for the private sector to shift towards cleaner energy and adapt to climate impacts that are already affecting companies of all sizes. But currently, a lack of clear, comparable, and consistent information on what risks companies face and how they contribute to the climate crisis is leaving investors and other stakeholders in the dark. The need for information remains critical yet elusive. Our panelists today will discuss corporate climate risk and disclosure from multiple perspectives and the benefits of a standardized approach to analyzing and understanding the effects of climate change on businesses. Let me remind everyone that we'll have some time at the end of our briefing for questions and we'll do our best to incorporate questions from our online audience. If you have a question, you can send it to us via email at ask at EESI.org. That's ASK at EESI.org. Or even better, follow us on Twitter at EESI online and send it to us that way. We have a special guest today and it's my privilege to introduce Representative Sean Casten. As a scientist, clean energy entrepreneur and executive, and now as a member of Congress, Representative Casten has dedicated his life to fighting climate change. In Congress, Representative Casten draws on his two decades of experience as a business leader to reduce emissions while creating jobs, lowering energy costs for Americans and spurring economic growth. Representative Casten serves on the Science, Space and Technology Committee, the Select Committee on the Climate Crisis and is the vice chair of the House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets. He also serves as co-chair of the New Democrat Coalition and Climate Change Task Force and co-chair of the Sustainable Energy and Environmental Coalition Power Sector Task Force. Thank you, Representative Casten, for joining us today. I'll turn it over to you. Hello, Congressman Sean Casten here. Thanks so much for having me. Sorry, I can't be there in person as always, but we'll talk a little bit about climate risk disclosure. We, of course, introduced the Climate Risk Disclosure Bill, passed on the floor of the House, and then just like they say on Schoolhouse Rock, a bill becomes a law because the president signs an executive order and implements, that's a joke. So, but they're not doing that. The SEC, of course, their comment period has closed and I can't comment on SEC rulemaking. I'm sure a lot of you are weighing in, but I think it's important to understand why we pushed for this and why the SEC is doing it and what we have to do next. One of the big reasons to pushing for this is that we need investor disclosure. We have trillions of dollars of funds and ESG assets that increasingly can't define things in a consistent way. If you're investing in a geothermal plant and that geothermal plant is selling their electric output to an aluminum plant and both of them are claiming to be zero carbon, if you invest in both, are you doubling your carbon impact? I mean, this is an objective question, but the SEC rules haven't clarified how we're going to go through and report that so that people who want to invest in cleaner assets know how to do that. And then you, of course, get layers of questions on top of there. How about if you own the equity but not the debt? What if you own the debt but not the equity? How does that get counted? And the SEC has got to, somebody has to define all that stuff and we pushed to do it legislatively and hoping that they'll push through. Going forward though, there's really a bigger issue that once we get this data in, then we get to ask the really critical questions of trying to understand where is the financial risk in our capital markets from climate change? Where is capital flowing away from? Because it's running away from flooding or fires. We're from industries that aren't going to be around. Where is it running to? The places that are building batteries, that are building wind turbines. We know that that money is moving in the financial system. We know that that rapid movement of capital has to destabilize the financial system. And we know that our financial regulators so far really don't even have the data to track it. So we're hoping that with this SEC climate disclosure we can start to get the data. We've got follow on bills that we need to do in Congress to make sure that our financial regulators both domestically and internationally start tracking those capital flows. And I hope you'll work with us because ultimately we're going to need something like GAP, FASB for clean energy that comes up with these rules to make sure that the United States continues to be a leader. So thanks, I hope I've triggered some thoughts and look forward to seeing you all in person sometime soon. Thanks to Representative Kaston for joining us this morning and providing some introductory remarks. And I always appreciate your Schoolhouse rock reference as well. So thanks very much for that. That is the perfect way to lead into our really incredible panel this morning. Our first panelist is Madison Condon. Madison is an associate professor of law at Boston University. Her research has focused on the relationship between climate change and corporate governance, market risk and regulation. Madison, I'm really, really looking forward to your presentation today. I'll turn it over to you. Thank you so much for having me. I will share my presentation. How's... My screen just went black. Can you see my side? You can see, there it goes. Looks great. Okay, great. Okay, so thank you so much for having me. I am going to try to do a pretty background explanation of where we are with climate financial risk oversight in the Biden administration in general. There's really a lot going on. So in May, 2021, Biden issued this executive order on climate-related financial risk, which really gives all financial regulatory agencies a climate risk oversight mandate. So some are farther along than others in their rulemaking proceedings. And notably the SEC has not only the climate disclosure rule, but two other rules in the works as well, which I will mention. And several agencies, in addition to the Federal Reserve, which is independent and so not subject to this executive order, have joined this thing called the network for greening the financial system, which is an international network that provides recommended regulatory policies and different strategies for monitoring systemic risk that many central banks and financial regulatory groups across the world, mainly in Europe and in the UK, are beginning to adopt. So we are moving along with the rest of the world finally. And this, so this is just a quick, we're not gonna go through this whole slide, but I thought this was a good overview just to show how many agencies beyond the SEC are engaging in some type of policy work or rulemaking in this arena. I took this from Siri's, the investor policy group. So it's the Fed, the FDIC, the OCC, you can see all these different groups are trying to figure out how to understand climate risk and how to then do actionable regulation around it. So as Representative Kastin mentioned, data is a really important fundamental first step to doing the rest of the steps. And I'll just mention a few things that have happened this summer. Outside of the SEC, so Treasury announced that there's going to be a climate data and analytics hub housed within the Office of Financial Research that will sort of build a giant data lake of all the climate risk of information that's available from the science agencies and from some private providers and public providers and be a resource, the plan is for it to be eventually be a resource across the financial regulatory agencies, including the Federal Reserve. And another development is that OCC, the Office of the Comptroller of the Currency, which is the banking regulator, has a new office of climate risk and they hired a new climate risk oversight officer from the New York Department of Financial Services, Dr. Nina Chen. And she's probably one of the most qualified people who's really been thinking about how to do climate risk oversight of the banking sector. So there's a lot of really exciting things happening across the federal government is what I wanna flag. So at the SEC in particular, we have three rules in the works. There's the climate related disclosures for investors. So that's from issuers, from corporates that are publicly traded in the market have to disclose their climate risk. There's also two rules that are aimed at funds themselves, at investors themselves. One is called the names rule, which sort of regulates how you brand and market your fund, your index fund or your ETF or your active fund. If you call it sustainable, like what does that mean? And one is sort of increased ESG disclosure rules for investment funds and advisors that claim to be ESG or use ESG data. I'm not gonna spend very long on this slide because I think probably most of your tuning in, you're at least aware mostly of what's on this slide, but I would say traditionally climate risk in general is broken down into three subcategories, physical risk, which is like, is your factory going to get hit by a hurricane or a flood? Transition risk, which is are you over-invested in fossil-intensive industries that are not prepared for the transition that are gonna have stranded assets are gonna be less holding a bunch of oil fields that aren't worth money, that have a bunch of cleanup costs and liability risk, which is really on the rise, I would say. There's an increasing number of lawsuits of many different types against fossil fuel producers growing in the courts internationally, but also in the US. And one thing I really do wanna flag is that climate risk analytics, climate risk analysis in the financial desk sector and physical risk in analytics in particular is like an exploding and huge business and has really been driving like a lot of mergers and acquisition activity in the financial services sector. So like Moody's and S&P are in sort of this like climate intelligence arms race trying to buy up catastrophic risk providers and ESG metrics. And there's really been like a ton of business of trying to assess these financial risks. So I flagged that just to say that what the SEC is doing is very much sort of like mirroring and standardizing what the industry has been doing and has been like on the mission to do for many years now, and it's been accelerating. So the subject of greenwashing has been in the press a lot recently and there's different greenwashing concerns in different parts of the financial sector. So what are concerns at the corporate level and how might disclosure address these rules? So if you've made a net zero goal, are those goals achievable? Are they based on science? Do they over rely on unproven or unreliable activities? Do you have some sort of tracking and monitoring system? What if you bought a bunch of carbon offsets and the forest that you bought to offset your carbon has now burned down? That's, this is an evolving space. Are the scope emissions that you report actually accurate? Are they audited? So this is one of the problems is that there's an enormous, robust, voluntary carbon disclosure framework. And investors use this voluntarily disclosed information in like very key ways that affect the allocation of assets. They use your scope three emissions data and how they build an index fund. And whether or not that data is real is a real question, is verified as a real question. And it's sort of a sketchy industry right now, even with some people can claim that their emission scores have been audited, but it's sort of what level of auditing do you really mean? So it's a little bit of the Wild West and the disclosure rule will really make it a little more rigorous. Are the emission scenarios used by the company for assessing their transition risks reasonable? So companies have gotten in trouble in the past for saying, here's emissions demand that we've taken from the IEA, the International Energy Agency. And like here's how our business will be resilient against these emissions. And basically they've cherry picked one out of several emissions futures that the IEA has actually produced, one of the least likely ones. And just shown that to their investors as if that is the future. And that can definitely be seen as misleading. And some companies have gotten in trouble for this in the past. And there's more and less sophisticated ways to be misleading about this. And physical risk has received less attention so far, but really it needs to be a bigger concern in a lot of ways. And this is another field that is moving and evolving really quickly. Right now the SEC proposed rule asks for disclosure of location based risks at the zip code level. And that's, we can talk more about that in the Q&A if it comes up. So concerns at the fund level. Did the funds simply rebrand as ESG with no substantive change to their methodology? There's been so much reporting about this of a certain funds fund necessarily happens to have a bunch of German and Japanese companies in it, magically gets rebranded as ESG. And it's not clear if the investment methodology underlying that fund has like really been tilted in any real ESG way. Is the composition of the fund consistent with the prospectus, like how you describe your investment methodology, does it make sense when you actually look at what companies are in the fund? Do fund investors, when you pick the fund from a menu of funds, do you understand what the sustainability fund means? Like you might think that it means you're putting your money towards decarbonization and it might actually just mean that the investor is sort of using the emissions metrics as like a pure hedging against transition risk. Trying to buffer against transition risk is a different motivation than trying to actively invest in low carbon technologies. And those issues can be very confused in the way that ESG funds market themselves now. And this is my final point for this slide and I'll wrap up very shortly. Does how the fund vote on clear ESG issues is that consistent with how they market themselves? If you're an ESG or low carbon or climate fund, you might assume that the fund votes for all the climate votes that have happened in all the annual general meetings of all these companies. And that's not always the case. So that's another issue. And then this is getting a little bit into the weeds but there's different types of ESG funds and this sort of matters and it matters in the bigger picture too, even as we think of as Representative Castin mentioned in the beginning, we use the stock market and we use equities and debt to move assets in the economy and we hope that they're doing a good job. And, but this is how actually assets are being moved in the economy. Some people use ESG metrics as sort of one factor among many and we can think about whether that's doing what investors think the funds should be doing. What is ESG risk? This has become sort of an annoying question. Like, is it flood risk? Is it emissions? So this is sort of a Wild West. And these all have different levels of disclosure under the proposed rule. So we can talk about this more in the Q&A if there's interest, but I'll just flag the ESG impact. That's the fund that claims that they are actually advancing low carbon solutions to the economy or pushing for plastics or increasing diversity even, you know, trying to advance certain social goals in the economy. And right now it's very confusing for a client investor to really understand the difference between these funds. And I will stop there and move on to the next present presenter and hopefully we can return to some of this in the Q&A. So thank you. Thank you, Madison, that was great. And your slides were very informative. It's a great reminder to me, to remind everyone in our audience that all of our presentation materials will be available on our website after the briefing, actually pretty shortly after the briefing, that's at www.esi.org. In addition, we'll have the archived webcast so you can come back and watch any of this if you would like to revisit any of Madison's presentations or the upcoming presentations. And in a short amount of time, we'll also have written summary notes so you can easily skin the content, including the Q&A from our briefing today. That brings us to our second panelist. Emily Wasley is a practice leader with WSPUSA. She leads WSP's Corporate Climate Risk, Adaptation and Resilience Practice in the US, assessing and managing the physical risks of climate change and the risks and opportunities associated with transitioning to a low carbon economy consistent with the guidance provided by the Task Force on Climate-Related Financial Disclosures. Emily, it's great to see you today. Welcome to the briefing. I'll turn it over to you. Daniel, and Madison really laid a good foundation for me to describe to you today a little bit more in detail of the alignment of the SEC proposed rule that came into our world in March of 2022 this year. That legislative proposal really aligns with two components of corporate greenhouse gas and climate change information. So it aligns with the Task Force on Climate-Related Financial Disclosure. This is the TCFD that I'm gonna be going into a little bit more depth about, as well as the greenhouse gas protocol. So the greenhouse gas protocol really looks at the scope of one, two, and three greenhouse gas emissions, really looks at companies understanding of what their footprint looks like, both direct and indirect emissions. And the TCFD framework is what I'm gonna go into in a little bit more detail here. I'm also gonna cover a little bit of information about what's happening in the corporate space on adaptation and resilience. But as Madison mentioned, there's not enough happening, so I'll probably try to reiterate that with my talking point. So leading up to the Paris Agreement in 2015 and shortly after the financial crisis in 2008 to 2009, the G20 established the Financial Stability Board, the FSB. So this FSB was established internationally to really look at systemic risks to the global financial system. One of these risks is climate change. And Mark Carney was the chair of the FSB from 2011 to 2018, and he had a very famous speech that spoke all about how climate change, as a systemic risk, is having an effect already and will continue to have an effect on the global financial system. So because of that, and because he was the chair of the FSB, he asked that a task force be formed in 2015, leading up to the Paris Agreement. And this task force is, again, the Task Force for Climate-Related Financial Disclosures or TCFD. The task force was co-chair by former mayor Michael Bloomberg and members of the task force included investors, preparers of disclosure and reading agencies. As I mentioned, the purpose of the task force was to really better understand and develop a framework for investors to be able to better understand what climate risks exist for publicly traded companies, for those companies that they're investing in, so that they can then inform their capital allocation decisions. What did they produce? Well, they produced a final report in 2017, and that's kind of considered the Bible of TCFD. Everything you need to know about TCFD is in there. It includes the final recommendations. And these recommendations really outline a voluntary framework for climate-related disclosures that includes four core elements, governance, strategy, risk management, and metrics and targets. I'll go into that in a little bit more detail, but because of this final report that was released in 2017, investors around the world have been really encouraging publicly traded companies to voluntarily disclose their climate-related risks and opportunities and how they're managing those. Because it's voluntary, that is why it's so important for this SEC proposed ruling to really come to fruition because although companies are voluntarily disclosing data, it's not happening at the pace that we really need to happen because climate change is accelerating, we need to have these disclosures and actions by corporations really happening on the ground more significantly. The TCFD recommendations also include a variety of different core principles that disclosures need to be relevant, specific, complete, clear, balanced, comparable so that the investors can really look across the sectors and the type of companies that are disclosing this information and really be able to say, okay, is this sector really moving in the direction of climate action that needs to occur? Or do we need to really speak with them and see how they can do so more aggressively? The recommendations also aim to provide disclosures that are forward-looking and decision-useful. Decision-useful, you can put data out there but if it's not decision-useful and it's not informing investors on how climate change is affecting publicly traded companies or different sectors, it's not gonna be decision-useful. So again, as I mentioned, this 2017 final report is really the culmination of the task force recommendations that really lay out a solid foundation for companies to publicly disclose their climate-related financial impacts. So, Mark Carney again, the chair of the Financial Stability Board believed the time and it's still true that with better information as a foundation, we can build a virtuous cycle circle of better understanding of tomorrow's risks, better pricing for investors, better decisions by policymakers and a smoother transition to a low-carbon economy. The core crux of the recommendations I'll go into shortly but what I really wanted to highlight here is that because the TCFD really highlights both transition risks and opportunities but also physical risks and opportunities, there's a need for a growing need for transition plans to really, once the companies understand what their risks are for both transition and physical, they need to have a plan and how to manage those risks. So, transition planning has been increasingly of interest for publicly traded companies to really publicly disclose a transition plan, investors are requesting these and adaptation plans are being discussed in the EU, European Union, but not as much in the United States as it needs to be. So, adaptation planning is really, as Madison mentioned, lagging behind transition planning. So there's increasing value for the TCFD recommendations. Here on the right is the graphic that illustrates the four core elements that I just described, but implementing the TCFD recommendations effectively and equitably can really be a vehicle for organizational change management and mainstreaming climate change across all decisions that companies make. So it's really a great global best practice for climate risk management and disclosure, if done effectively and transparently and equitably. So those components, I really wanna emphasize because you can put out information that's aligned with TCFD, but if you're not putting out information that's helping investors understand how you're managing these risks and taking action on climate change, they're really not decision useful and it's gonna be into that greenwashing realm that Madison described. Because the TCFD was created by investors, it's been really interesting to see the uptick in the number of TCFD aligned disclosures and TCFD standalone reports. State Street, Black Rock Vanguard, all significant investors and publicly traded companies in the United States have all encouraged their, the companies that they invest in to align with TCFD because they understand that it provides greater transparency around climate risk and it enables their own decision useful information. Really, the TCFD also looks at forward-looking physical and transition risk and opportunity. So it really takes this realm of looking at both actual risks. So risks that companies have faced today, perhaps they've experienced litigation risks that Madison mentioned, or perhaps they have experienced physical risks to their supply chain and it's interrupted their business operations. But they also need to look at what may happen in the future using scientific climate scenarios. So I'll go into that a little bit later, but if you're gonna take one thing away from this presentation today, this is the core four core elements of TCFD and the 11 core disclosures. So from that 2017 report, this is the snapshot of what you really need to understand and how when people say, what are the TCFD recommendations, this is that. So when we look at governance, it's looking at the disclosure of the organization or company's governance around climate-related risks and opportunities. It's looking at the board oversight and how management within the company is assessing and managing these climate-related risks and opportunities. So really looking at how the organization is governed and if it's governed for climate action or if it's really not governed for climate action and the company needs to disclose how it's going to be overseeing the climate-related risks and opportunities that they have identified. The strategy component is really looking at the business strategy. So disclosing, as I mentioned before, the actual and potential impacts of climate-related risks and opportunities to the organization's business, its business strategy and financial planning, where information is material. So materiality has its own description, I'm sure many of you are aware of what that looks like. And that's kind of the contention on the SEC proposed ruling is do we do companies disclose material topics or do they disclose all topics that are useful to them? When we go into risk management, it's really disclosing how the organization identifies, assesses and manages the climate-related risks and then we go into metrics and targets. So how companies are making progress towards managing those risks, towards reducing the risks to their organization and to the communities where they live and work. So Madison briefly went into kind of the various different types of risks when we talk about climate-related risks. Here we have transition risks, which can be policy and legal, technological risks, market risks with market shifts, consumers wanting different products that are more sustainable and reputational risks. This comes when the greenwashing discussion happens, companies can really face significant reputational risks if they're saying one thing but investing in fossil fuels and continuing to do that. Physical risks are both acute and chronic. So looking at extreme weather events but also the systemic issues around climate change which talk to kind of sea level rise, higher temperatures, changing precipitation patterns. And then we look at different opportunities as well. And so these opportunities include opportunities for more sustainable and resilient future. So resource efficiency that could include energy and water, different energy sources, renewable energy, the development of new products and services that are more sustainable and resilient. Again, new markets that are driving climate action and resilience. All of these risks and opportunities have financial impacts to companies. And the way that we look at that is through their income statement, their cash flow statement and balance sheet. So I mentioned climate scenarios. This is really at the heart of TCFD. What investors really want to understand are what have the risks been to date but also under a variety of different future scenarios or future narratives. How could climate change impact the company's business strategy? So if it's a business strategy that's focused on fossil fuel and that's gonna have pretty significant transition risks if that company is trying to reduce their greenhouse gas emissions. So this graphic on the left really looks at a variety of different future climate scenarios that companies look to when they're doing their qualitative and quantitative scenario analysis for really better understanding what risks they might face in the future and how they can actually manage those risks moving forward. On the right here really looks at the difference between the significant difference between a 1.5 degree change in temperature globally and a two degree change. So there are impacts that will be more significant if we continue to reduce or continue to release greenhouse gas emissions. So we'll have more physical risks under a two degree scenario than a 1.5. So this gets into a little bit more detail. So 1.5 degree warming, that means that if we keep it at 1.5 degrees, if we align to the Paris agreement, we'll have less physical risks, we'll have more significant transition risks but also more transition opportunity. So we'll see kind of large rapid greenhouse gas emission reductions. We will have some mitigated, some reduction in physical risk but not completely eliminated because we've already released enough greenhouse gas emissions into our atmosphere to have those physical risks be baked into the system. We'll have more significant carbon pricing and disruption from the transition to renewable energy with less energy intensive options. So that will be really kind of the 1.5 degree scenario outlook. A four degree warming, it's kind of the trajectory that we're on right now. I may really need to slow this. So with a four degree warming, we'll have much more significant physical risks. We'll have less transition risks and greenhouse gas emissions will continue to rise. We'll very slowly see a transition to low carbon future. We'll have much more significant damage to assets and infrastructure will have populations migrating. We'll have productivity loss across the world. Supply chains will continue to have significant impacts and economic losses will be considerable from the climate impacts we face. So really our future is determined by how we choose as humans to take action on climate. So with that all said, the TCFD recommendation and alignment with TCFD is quite a journey. Implementing the TCFD recommendations, really we've seen through our work with different corporate clients, a progression of starting with identifying an internal working group. So having champions within the company to really move this effort along, getting buy-in from the financial, from auditing from a variety of different entities to really understand what, how climate change is gonna impact the company and it's through these champions in a working group. We're gonna be then, we develop a gap analysis of existing processes. So we look at are the companies TCFD aligned if they're not, where do they need to better align? We then get into scenario analysis understanding potential futures. And then we get into kind of the mainstreaming of how do we actually integrate climate considerations into and across all business functions within a company. And what does that mean in terms of decision-making for future investments, future assets that they want to manage and operate in the future. So I'll, this is one of my last slides, but just to give you a little bit of background on the difference between adaptation planning and transition planning, what we're really seeing is on the adaptation side, we think about actions that manage physical impacts of climate change. So flood protection, natural infrastructure, cooling centers, business continuity planning. We then also have transition planning. So sustainable transportation actions that really reduce the greenhouse gas emissions that are causing climate change. In the middle, we have those co-benefits. So they provide benefits for adaptation and transitioning. So those include water and energy conservation, community building and urban forest. So we really want to make sure that we're seeing both transition planning happening, but also adaptation planning. And to be honest, like a lot of adaptation actions are taking place within the corporate space. There are a couple that have been really moved by different initiatives that are global in nature. So the UN global compact, which aligns with the UN sustainable development goals have really been pushing on both adaptation and resilience as well as the greenhouse gas emission reduction efforts for transitioning. The CEO water mandate, which was established in 2000 really has a good focus on adaptation. But again, more is definitely needed. And with that, I'm gonna turn it back to Daniel for the next speaker. Congratulations. Take a moment before I introduce our third panels to remind everyone in our audience that we will have some time for Q and A at the end of our briefing today. And if anyone in our online audience would like to send us a question and do that one of two ways or both you can send us an email and the email address to use is askask.org You can also follow us on Twitter at EESI online and send it to us that way as well. We encourage that for sure. Our third panelist today is Jane Jag. Jane is the Deputy Director of Net Zero Finance at the We Mean Business Coalition. Jane works with companies to ensure more useful and reliable climate data to investors and with investors to find better ways to work with the provided data. Jane, great to see you today. I will turn it over to you. I'm really looking forward to your presentation. Thank you so much. Next slide please. Thank you so much for having us and thank you for giving us the opportunity to discuss this important topic. As indicated, my name is Jane Jag and I am the Deputy Director for Net Zero Finance at We Mean Business Coalition. And we are a coalition of seven NGOs and we try to coordinate our work and efforts on climate action together with 9,000 companies in the entire world to achieve the global goal of having the emissions by 2030. I personally have a financial and auditor background and you will also hear that in a moment. But I have also worked with ESG and sustainability for the last decade in large listed companies and in academia. In my current role at We Mean Business Coalition, I work with companies to make them report in a better way and I work with investors to use this better reporting. Next slide please. So to achieve the goal of having the emissions globally, we also need support from good reporting legislation whereby the capital providers, they can funnel their capital to the greenest profitable ideas and companies but also to the companies which are on their way. For that, we need more and better company reporting but at the same time, we need simplified legislation so all, also the SMEs can do quality reporting without breaking the bank while the reporting is still useful. Now, that's the trick. So ESG has for a long, long time been an alphabet soup of reporting frameworks which has not been helpful for companies or investors. Thus, we are very hopeful that with regards to the new international sustainability standards that was created last year and who this year have launched the first set of reporting standards. We are also very supportive to see that the US SEC launched the enhancement and standardisation of climate related disclosures for investors which I today will shorten and say, US SEC climate law. I would like to mention here that there have been other local legislation and standards launched this year but today I will focus only on these two and how they fit. But you can also ask about the others if you want to. Next slide please. So why do we even care whether the current draft for US SEC climate law fits with the international standards? Because it is the most efficient for companies. Think of all the listed companies which are dual listed say on London Stock Exchange and New York Stock Exchange or companies who have large subsidiaries in all jurisdictions which may also be forced to report locally to that single legal entity then it is so much easier and cheaper if there is only one set of reporting framework to cater for or at least a common baseline. Now that's why we call for a global baseline but also because it is much, much better and more efficient for the investors that they immediately can compare the data from all companies globally. That will make their investment choice far better informed and they can funnel their capital to the most profitable green ideas. Next slide please. So the first question is how do ISSP and the US SEC climate law fit? Actually fairly well. It's not that far off. There are of course minor elements that one could find but overall not that far off. But we would though recommend that the following larger refinements are done. We need to future proof the alignment. For that we need two changes in the legislation and to secure cost efficiency and useful reporting we also need one fundamental clarification in the legislation. I will explain that now. Next slide please. To future proof the international alignment there should be a clear reference to the ISSP. As you can imagine the ISSP will develop in the coming years and just like the financial reporting standards like the US GAAP or IFRS has developed over time. So if the US SEC climate law is to maintain the current nice convergence with the ISSP there must be a clear reference. That will be the easiest and most trustworthy for all. Next slide please. The current draft is based on TZFD and as Emily just told us that is a good thing. But that will also entail that the companies are to report on climate resilience which may also cover reporting on climate risks and opportunities. Risk reporting is not the issue here that is actually given by existing reporting laws and the company have to report on risk that is given but opportunity reporting that is problematic for the listed companies. Let me give you an example. Say you're a transport company with a fleet of diesel trucks and you want to reduce your emissions and transparently report on this to your investors. So you make a CO2 target for 2030 and you publish a plan for how you will reach that target. That plan might include the opportunity to change the fleet of trucks into new trucks driven by other fuels before the competitors. But the technical solution you foresee now in 2022 may be outdated or the availability of these trucks might be very limited when the time hits and you are to replace the current trucks. But now you have promised a given technical solution for your company to the market. So your company risk being dedicated for giving such an unsolicited promise to the market. With the current legislation will it be especially problematic for the listed companies to report on these forward-looking elements which sometimes may not come true without risking being privately litigated. But the investors need to see the plans to be able to evaluate if the targets have any substance to them and are not just wishful thinking or even worse green-washed marketing. Therefore, we need that climate scenario reporting and target setting for the CO2 emission to be subject to the general safe harbor protections under the private security litigation reform act. We also call on this because we can already now foresee that dualistic companies will be placed in a very difficult legal situation simply because it will be mandatory to develop and report on these plans in some jurisdictions that follow ISSP while it will be problematic to do so in the US if this is not fixed. Next slide please. So apart from these two changes I have just described we also have a recommendation for a clarification which will both enhance the usability for the reporting and also reduce costs for companies. For the non-financial data to be truly useful it is important that it has context from the financial data whereby the company for instance can say that with this revenue, this production, this cash flow we pollute this much. But that of course requires that the boundaries for the two sets of data are aligned otherwise will it be apples against oranges and the current suggested carbon intensity KPI will be useless. Using financial boundaries means that the financial rules for consolidation are reused. It also means that the rules for leasing are prolonged and reused as well which means it must be clarified that emissions from owned and used assets must be included in scope one and two. Now that's the easy one, now comes the tricky one. Emissions from assets leased in regardless of operator roles must also be included in scope one and two and the consequence of that is that emissions from owned or leased in assets or leased assets which release out to others they cannot be included in scope one or two but they should be included in scope three. If that is clarified we will get comparable and useful reporting. The financial rules will also help determine whether a lease is truly a lease or it is sale of services and thus whether the emissions from a given activity are to be included in scope one, two or three and thereby make comparable reporting. Using financial boundaries will also enhance the company's ability to reuse their existing ERP and consultation systems for greenhouse gas data which will reduce cost and time spent by the companies as they do not have to buy a specific ESG system they can simply reuse and extend the existing systems and you can trust me it is not that complicated and it does not take that long time to fix that within a given company even if they have hundreds of subsidiaries I have done it and it can be done. Using financial boundaries will also make it possible for the audit to be done on reasonable level as it will be possible to assess completeness of the greenhouse gas reporting which is close to impossible if there is no context for the data. For instance, you never get fuels for free thus you can extract both the fuel cost and the quantities from the invoices and there you have it a strong external evidence from the invoices that the fuel consumption for the CO2 calculation is in fact complete. So for all these fantastic reasons we strongly strongly urge for that the boundaries are defined to be financial that must be clarified in the legislation. Next slide please. So to sum it up the current legislation draft is actually fairly good and we support it definitely but to future prove the international alignment we need it to refer specifically to ISSP and we need a safe harbor for forward-looking statements regarding climate. And finally to ensure the cost efficiency for companies and ensuring the data is actually useful for the investors please clarify that the reporting boundaries have to be financial. Thank you for your time and for listening. Jane, very much for joining us today and for your presentation. A good reminder that presentation materials will be available online so if you missed any of that if you'd like to go back and revisit Jane's slides or if you would like to go back and re-watch any of our briefing you're welcome to do that at www.eshi.org everything's freely available of course and we'll also have some written notes after our briefing. It'll take us a couple weeks to get those up but they're really really useful. Our fourth panelist today is Ryan McQueenie. Ryan is a Sustainable Investment Stewardship Analyst for WestPath Benefits and Investments. As part of the stewardship team which is an industry leader in sustainable investment sorry Ryan as part of the stewardship team at WestPath which is an industry leader in sustainable investment. Ryan supports the organization's participation in the Net Zero Asset Owners Alliance and it's thought leadership on climate risk. The word stewardship that's a tough one for me today so I'll keep that in mind when we get to the Q&A. Ryan I'll turn it over to you really looking forward to what you have to tell us today. Great thank you. Well hopefully it doesn't trip me up too much because I'm going to say stewardship several times throughout the next several minutes so I'll open my slides. Great so yeah thank you touched on a little bit of that background of who WestPath is I think the important thing to know is where we sit in the investor ecosystem so we're an asset owner we are focused on pensions, retirement and health benefits as well as endowment investing and specifically we provide retirement services and investing for the United Methodist Church and it's approximately 100,000 current and former employees as well as a number of Methodist-related foundations, endowments and other non-profits. As an investor focus on those things pensions, retirement, health benefits endowments we're primarily focused on the long-term but really everything we do is grounded in creating the most long-term value for our investors over the long run and so we have dedicated ESG strategies we're certainly committed to incorporating ESG considerations we also have non-dedicated ESG strategies we're still working on creating the most long-term value in those investments by stewarding those assets with sustainability and ESG best practices in mind and there's that word again investor stewardship you might hear folks call it engagement, you might hear folks call it active ownership this is a big part of our process we engage on quite a few sustainability topics not the least of which of course is climate change and so that kind of gets me back to our main question today which is why do standardized climate risk disclosures matter for investors and for companies so for me from our perspective one key answer is that it provides us and other investors that are doing this engagement work that are doing a stewardship work on climate specifically it provides us with much much better information regarding how exposed our investments are to climate risk and how these companies are managing it and then it also adds an accountability mechanism to the engagement conversations if we are pledging this type of transition plan or we're committing to this type of transition plan over 5, 10, 15 years this reporting adds additional clarity and accountability to that so believe it or not that's the short answer to the question really is what I'll go over in the next few slides but before I jump into anything else further I just want to say everything I'm about to say is really pulled from this paper you see on the right hand of the slide which is the future of investor engagement we co-authored this through our membership in the net zero asset owner alliance and I believe we've made it available to you all on the materials for today if not it's definitely available for free online so please if you want to dive deeper into anything I mentioned it's an excellent resource I'm going to do a quick overview but you could spend a lot more time with it if you're interested alright so we've got that picture let's define some key terms as I mentioned stewardship in this context refers to investor action that includes corporate engagement and proxy voting for years that's kind of been the traditional definition corporate engagement and proxy voting but as we proposed in this paper I think it's totally reasonable to include this in an overarching definition of stewardship this can also include investor engagement with policy makers and regulators it can also include investors convening engagement conversations with entire sectors and value chains right having representatives and dialogues from an entire top-down value chain is a new form of investor stewardship that I think we'd really like to see fleshed out more then before I go further I want to just do a quick aside on that proxy voting element especially in the context of the SEC's proposed climate rule you know I think we'll get into this more we can get into this more if it's of interest but you know I think there's a big question about the legal viability or standing of the rule I just wanted to note on proxy voting the SEC is very much empowered to regulate disclosure that investors deemed relevant to their proxy voting we saw that in the comment letters I think that makes sense and should be a big part of the narrative going forward for investors and allies that are proponents of this rule that is providing key information that will influence proxy voting decisions that's something that's really important for the SEC to hear it's very much within the SEC's purview so moving on kind of just sticking with our definitions here systemic risk a couple folks on the panel have already mentioned systemic risk and I think it's really really important what do we mean by that from the context of an investor talk about risk all the time of course in investing right something like country risk where all of our investments are in the US so we are exposed to the ebbs and flows of the US economy and we go by international companies to counteract that maybe it's equity risk where we're all invested in stocks that go up and down every day for various reasons so we go by bonds to hedge that risk a little bit provide a little bit more stability a systemic risk cannot be diversified away like that inherent to the challenge that it brings is that you can't diversify it out of the portfolio so climate change is probably the best example of this there are some others that we could dive into but climate is understandable we could sell all the things today that seem like they have more climate risk let's say in oil and gas companies stock but that doesn't mean climate change just isn't happening anymore in the real economy or isn't having an effect on the real economy anymore still very much an issue that's going to affect all of our other investments in myriad ways and I appreciate that and the panel has brought up different definitions of transition and physical risks these are still really challenging risks to grapple with and it's really challenging from an investor's perspective because our traditional tools like asset allocation don't really land on a solution so we have to think about and that's why we think about how investment stewardship and engagement can help manage this risk how we can use the other tools that investors to try to land on the solution or at least influence the economy getting to a solution then finally I just wanted to touch on the net zero asset owner alliance a little bit more to UN convene coalition about 70 members right now or a little over 70 now represents over 10 trillion dollars in AUM from all the members combined again it's in the name it's all asset owners insurance companies all committed to achieving that zero portfolio emissions by 2050 and setting interim targets over five year periods along the way and really crucially doing the best we can to support the change needed in the economy that is consistent with a 1.5 degree scenario so getting back to our core theme here the alliance and its members absolutely need quality climate disclosures and mention those interim targets every five years we're setting interim targets anecdote from Westbath our experience setting our first target obviously we first need to get a baseline to know where we're at now so we did kind of a full carbon footprint of our portfolio when analyzing our US equity fund to establish that baseline we learned that only approximately 50% of the market value of our funds investment companies were self-reporting the data that we needed so the other 50% is all estimates and mind you we have to then go get a service provider and pay for that service provider to come in and do those estimates for us so that's one practical reason right there we believe that improved data methodology will help alleviate resource expenditures and reliance on third party data providers that's currently required so helps save us some money to help us be better stewards of our investors capital which is certainly going to help us fulfill our fiduciary obligations to them wanting to get on the weeds a little bit more on corporate engagement what are we doing when we are going to engage companies on climate I think the simplest way to think about it is we're doing we're trying to get companies to do more to decarbonize or to address climate risk right there's some low hanging fruit here and this kind of assumes that we've already captured the low hanging fruit the stuff that is going to be resulting in obvious near-term benefits profit maximization to the company we're transitioning to renewables or securing some sort of low carbon alternative is an obvious short-term benefit assuming we have good enough management companies in the portfolio level to get us there from beyond that what we're talking about is doing more often times increasing near-term costs investing in a plan that will benefit us over the long-term by reducing climate risk and contributing to real economy decarbonization and so there's inherently that short-term long-term tension but still you know we believe that climate change is among the number one potential disruptors of economic activity so there's plenty of reasons for companies to want to move up this kind of steepening cost for even if there is more near-term resources needed the real trouble for investors pursuing this thing is and companies get that by the way sometimes we meet resistance on that but I think for the most part companies understand that the real trouble for investors and companies pursuing this type of model this type of engagement approach is that there are many other things at play here that limit the efficacy of the approach and that is laid out in further detail in the paper as I mentioned we've got five highlighted here I point everyone in the context of this conversation to limit number three inefficiencies of focusing on voluntary company by company disclosure one of the main realities of corporate engagement on climate is that a ton of our energy is spent on encouraging companies to just do more disclosure so obviously the end goal is decarbonization and mitigating that climate risk all that related information is essential for measuring companies accountable to it as I mentioned we're spending so much of our time right now just on stuff that is essentially covered by the SEC's proposed climate rule so one nice thing about climate rule is it frees up a ton of our time to focus on other stuff which is what the other thing I would point out specifically highlighted in this conversation is limit number five which we're saying are the boundaries set by the rules of the game you can essentially think of the rules of the game as the policy and regulatory frameworks that we're operating under so we've kind of described that here with a look at scenarios how those policy and regulatory frameworks could align with different global warming scenarios but this is just kind of getting into the practical realities and where companies and investors are limited in their ability to support economy-wide decarbonization and that systemic change that is going to be needed to really get us closer to a 1.5 degrees trajectory we're talking about actual economic incentives that companies have to seek decarbonization we're talking about subsidies we're talking about pricing mechanisms that actually change global energy supply and demand dynamics and ultimately we're talking about things that are set by governments and set out by policy makers significant legislation significant judicial precedent needed more ambitious and coordinated management of climate change on a global scale and again there's only so much of that that investors and companies can do themselves so there's a lot of work that we need done by policy makers and you know it doesn't mean we should be sitting in our hands saying like gee I hope there's policy coming one day we can go out and influence it we can encourage companies to influence it too I think we should be investors spending a lot more time on policy engagement and companies should be doing a lot more proactive lobbying in support of the Paris agreement goals in support of those economic incentives like carbon pricing right now we're stuck talking about disclosure and we're focusing on kind of those key you know accountability mechanisms at the portfolio company level something like the SEC's climate rule helps us get past that point where we can spend more of our time on this really essential political engagement and pushing for policy change that's essentially going to be what's needed to affect the systemic change that we need anyway and you know getting back to our remit as investors you know managing the risks in our portfolio and delivering our value delivering the best long-term value for our beneficiaries is our job right and if you know we think this is consistent with delivering the best long-term value for our beneficiaries so it's fully our responsibility we're doing as much of this as we can we just know that collaboration and coordination with policy makers is going to be essential at the end of the day to making this a successful effort so yeah I'll stop there Thanks Ryan and that's a great sentiment that this is part of your job I think to end the presentation portion of the briefing on today Ryan you mentioned that you recommended a report the future of investor engagement calls for systemic stewardship you did much better than me on that word today to address systemic climate risk that resource is available on our briefing web page and also Madison and Jane recommended some resources as well and we posted all of that on the briefing web page along with the presentation materials and you'll also be able to find it archived webcast I'll invite all of our panelists to turn their videos on and we will proceed with the q&a thanks to everybody who's asking us questions online we're going to start with a question about and I think we've covered it but I think it would be good now that everyone's heard the presentations maybe to revisit it and Madison will start with you since you were our first presenter today from different perspectives of stakeholders how would standardized climate risk disclosures be helpful and how would it be helpful differently for different types of stakeholders yeah that's a great question and you know there's many layers to this question too and I think that it's been you know I've been focused on the question of regulation of climate risk for many years and it's clearly gone through like generational changes as more and more people take it seriously and try to actually solve real world problems so you know there's one problem which is many of the ways that you are expected to report scope 3 emissions so your supply chain emissions they're not actually your measured emissions you just use like recommended equations for how to calculate what those emissions likely are and there's a lot of flexibility in the equations that you use even the ones that are sort of you know legitimate in the eyes of the investor community and they can really sway scope 3 reporting between different industries and then there's sort of so that's one way standardization could help but then there's even like a bigger more difficult question which I think is getting beyond your your question which is in which ways can it not help or in which ways are we like still evolving and it's not I think that people are starting to realize that you know scope 3 we need this information because we need site on supply change and where there's exposure it's not clear that scope 3 is the best measure of transition risk like once you start to boil you know it matters on your like jurisdictional exposure or like the type of industry you're invested in you know there could be a steel company that is actually doing a ton of research on decarbonization and like putting a ton of money into it and for like a decade its emissions don't go down but then they switch over in their emissions you maybe haven't captured that really if you're only doing some sort of crude scope 3 analysis so I think you know we could talk more about that as we go in the Q&A and you know I see Jane nodding but I think this is a really rapidly evolving space and it's almost like we need step one scope scope emissions and then beyond that which is starting to happen with the investor regulation is like what do you think these funds are doing when they say they're accounting for transition risk like what does that really mean and it you know yeah we'll stop there Thanks Emily from your perspective you know what is the how does this helpful to different types of stakeholders in the you know sort of the ecosystem of financial institutions and investors that we've been talking about today you know Madison had on a lot of good points and I think it really just helps set the stage and set a good baseline for everyone to be on the same page understanding that climate change is a systemic risk it is impacting already the financial global financial system and just accepting that so that we can move forward to take action there's going to be a variety of different levels of disclosure reporting and there's no consistency yet but I am hopeful with the ISSP and with the proposed SEC ruling that we will have some sort of consistency for reporting because it really helps all stakeholders not only go through the process of understanding what their risks are exploring that really looking at what because what we have found with different companies that we work with is this process of assessing climate change really brings together the traditional sustainability folks with the financial with the audit with the the engineers and it really kind of brings folks together to understand how climate change really affects all kind of business functions within a company what we're not seeing enough of which I think is really important is this leaning in of companies into the communities and how they're investing in resilience for the communities how they're investing in adaptation measures we've seen a lot of different companies originally say you know sea level rise is not an issue for me but when we dig into the supply chain issue it is and so that extends their reach in terms of what they need to understand for physical climate impact so it really helps all stakeholders and just being transparent is a good practice you know companies are already disclosing risk climate change is another risk that they face and being honest is really important and let's go to you next I'd love to hear your thoughts and then we'll wrap up this question with Ryan yeah sure I think one thing that we could potentially gain from having a more comparable reporting and a more widespread reporting from more companies as Ryan also indicated would actually be that we potentially could get rid of some of the ESG ratings and they are not the companies I can guarantee that part and as I understand it investors are not very keen on them either they're easy to use that part I understand but they are not very good what would be fantastic would be if we could use the data directly from the companies just like we today can use their revenue or their earning then we could have for instance on trading platforms we could have earning per share next column CO2 per share for instance that would be fantastic that they Ryan over to you agreed 100% with that and I think it goes back to what I was mentioning from an investor's perspective is freeze up a whole bunch of time to start focusing on other things including a bunch of the stuff everybody else is mentioning right how do we invest in actual low carbon solutions how do we start having more advanced dialogues with the companies we're engaging about how they can be using their influence to push for you know ambitious ambitious climate policy you know I don't want to sound too cynical and negative but like at some point we're still stuck doing all these engagements on climate disclosure and we really need to get past that point into action one thing I will say on that though is I mean I think we've all hinted at this in different ways of course disclosure is not action and that's you know it's not the level of action itself we need what I would say on that though is you know I think there is you know kind of an undergirding theory to sustainability disclosure that companies are more likely to perform well on something when they're forced to report on it companies are competitive right they don't you know we're in a hypothetical near future situation where everyone's reporting standardized climate risk disclosures we're now getting comparable information across sectors and across value chains and slightly optimistic that that might inspire it might itself inspire more ambitious climate action by companies thanks we got a great question from our audience that I think I'll interject at this moment and Madison maybe we'll start with you again it's something that many of us mentioned I think in our comments or in our remarks and presentations and the question is a few of your panelists have mentioned the need to address corporate climate risk equitably the assumption is that this is referring to the resulting impacts on people could our panelists speak more could the panelists speak more to what they mean and what some opportunities might be to make all of this more equitable and Madison if you'd like to take this one I'll give you the first chance and we'll go through the line again yeah I mean that's a great and complicated question that I have spent some time thinking about but I think we just need more people thinking about that from many different parts of society I think one big concern right is if you encourage the economy to de-invest from risky areas and invest in less risky areas then you might be fulfilling this like terrible cycle of people you know there's already insurance markets Florida and Louisiana are having trouble in their insurance markets already and like the private sectors are exiting the market and like that can expand to other services and like can affect municipal bonds and it can affect the structure of society and demographics and gentrification and like all these pretty obvious ways actually when you think about it like it affects insurance rates it affects bond ratings it affects where companies locate in general so you know what do you do about this conundrum in the sense that you're like actually advocating for better pricing and this is you can see the micro level when we think about how should the government flood subsidize I mean how should the government fund subsidize flood insurance you know that's not just a risk question it's like a question of how we value things in society so you know there's there's there's steps we can do to think about this you know we can think about we have the Community Reinvestment Act in which we require banks to not be racist and to fund like a certain part of their investments in certain communities to certain groups certain underprivileged groups you could think about using that framework to apply more broadly integrating that into the Community Reinvestment Reinvestment Act I think part of I think where this intersects with the pure financial risk and then I'll stop talking is sort of looping it back to the systemic risk like your building might be fine your factory might be fine it might never be flooded but if all the roads and the like water utilities of the town that your factory relies on like are not resilient to climate change then your factory is not resilient to climate change and so there is this really interesting I think sort of like realization of the ways it's almost like you didn't build that Elizabeth Warren line I mean I'll stop talking very soon but there is this very interesting fight between the big tech companies to intentionally built like in the San Francisco Bay and very exposed sea level rise planes with no they knew there was no levees there and now there's a big fight over like who should pay the enormous bill to build the levees like the local municipalities which are not necessarily very rich or Facebook and Amazon and Google or like where Amazon's not there but you know the that's one example that I think is going to play out in like big and small ways going forward as people try to think of all the ways that their supply change and labor force and like consumers are affected by climate change thanks Emily what are some opportunities maybe at our disposal to do what we're talking about today in an equitable way sure so I've given this a lot of thought and was part of a group of women international women who did some research on establishing a task force for equity and climate related financial disclosures so we called it the TECFD and what we did was we really focused initially on gender equity and the fact that you know project drawdown notes in their research that engaging in and investing in gender equity actually accelerates climate action for corporations so the fact that you know equity is actually leading to more action on the ground for climate change and other issues is reason enough for companies to really invest in the S component of ES and G I've noticed that there's been so much of a focus on the E component which is great but there's the social and the governance component as well that are so so important and truly when we think about just as Madison said if equity is not centralized in our decision making for climate action we will create this more vicious cycle that's already occurring on the ground where we will divest from vulnerable areas and instead of leaning in to really support and regenerate the resources that companies have extracted for so long and it'll just exacerbate our global equity issues as well so opportunities are because of our involvement WSP's involvement in this TECFD framework we've actually decided you know we're going to walk the talk so we're going to apply this framework to our own company WSP is a publicly traded Canadian company has 70,000 employees worldwide so we have a significant global reach we design an engineer infrastructure around the world so if we can do this and we can identify what does pay equity look like how does our board oversee the governance of climate action how are we managing climate change and you know emphasizing leadership and empowering and promoting people of color women across the management's line we can see much more accelerated action as a company thank you, Jane from the perspective of the We Mean Business Coalition what are you seeing internationally about ways to promote equity in all of this for equity and it's also a matter of being able to to diversify the risk profile as Ryan also indicated before so if the companies are not providing this information there is a good chance that you might be tilted in one way or the other so it is enormously important that the reporting covers this I wonder also because right now as you Emily indicated right now we only talk about the but I also know that many investors would actually also like to know at least a few elements for instance employee turnover especially the voluntary part because if you as a company would like to stand up and say we will grow but you can at the same time see that people run out the door faster than fast because they cannot stand being there then the likelihood for that company to grow is very small so there are several of these non-financial data parts that can be important for the investors and Ryan speaking of investors from your perspective yeah well I just want to emphasize what Jane just said we're also not getting that information right now from publicly traded companies in the US and we need the SEC to be doing more on human capital disclosures and they will be which is encouraging and these are intersexual issues so I really like that idea of layering these non-financial metrics or these sustainability metrics on top of each other and looking at their relationships we can't do that if we don't have standardized disclosure on both of those things so really good point there I would say when I think about equity in this context we know climate change stands to disproportionately affect low-income communities communities of color, marginalized communities folks with disabilities that's true what we don't want is our solutions to a portion of the negatively affect those folks luckily we got a lot of great people thinking about it I think the inflation reduction act sets a good precedent offering heavier subsidies or additional subsidies in the economic justice corridors I think that's good thinking beyond the kind of local community level where folks are going to be more exposed to pollution in certain areas more exposed to flood risk in certain areas this also happens at the global scale and this is set out by the Paris agreement notion of differentiated responsibilities some countries are more responsible for the carbon that is in the atmosphere already and they should be more responsible for the decarbonization of the global economy that makes sense real practical solutions for this ultimately it gets back to those economic incentives things like carbon pricing and then adding another level to your carbon pricing solutions where you are intentionally reinvesting the revenue that's generated from stuff like that into communities that need it the most thanks I think we'll mix up the order for this one Jane I think we'll start with you and we'll sort of go to Ryan and then to Madison and Emily the proposed rule the SEC would potentially cover lots of companies those companies are spread out across different sectors how would the SEC rule as you understand or the proposed rule as you understand it affect different sectors differently and are there potentially ways that the proposed rule could be crafted kind of what you were saying in your presentation to help different sector to help sectors that might face higher burdens and create disclosures that are required you know more easily yeah for good reasons there will be certain sectors which are more where scope 3 will be where will be difficult not to say that you have to report on scope 3 and there will be sectors where it is easier to say that that is not necessarily so and one could consider if there should be a slimmer version for the SMEs because it is a burden for really small companies to report on for instance scope 3 which might be difficult for them whereas scope 1 and 2 do not necessarily have to be super complicated to do so what could be helpful is to consider a minimum requirement and then on top of that when companies become larger and larger they aren't to report on more that is one thing but then also consider the sectors like for instance food and ag especially the food part they will probably need scope 1 and 2 from the ag but not necessarily scope 3 so and the ag might be mom and pop companies so it might be a different way of working with the data that is going to be a different way of working with the data. Brian just mentioned the food what about the ag what about the agriculture sector I am reading a lot about it. This is a really important point and I do think the SEC is thinking about it and there are certain tronches set up in the proposed rule for different requirements but I think agriculture is a really good example because the scope 3 conversation is kind of messy there for a lot of folks depending on where you are at in the agriculture value chain scope 3 might be where you get things like methane emissions from livestock that might be where that is captured and that is one of the most significant contributors to global methane emissions so clearly that is a huge footprint of a sector or a company's participation in a value chain so the trouble there though is at the individual farm level we don't want to be burdening small farmers, small individual, independent ranchers suppliers to big companies no doubt but themselves relatively small we don't want to burden them with cost-leading administrative work so we have to implement really difficult to manage systems that are expensive that they have to train themselves and their employees on that's not what the SEC is looking to do and I don't think that's what investors really want either the burden of compliance over the falls on those large scale purchasers from those suppliers those individual farmers aren't going to have to file directly I think the fear is that they would feel pressure from their large customers to start gathering some of that information, implement those systems or else those large purchasers might take their business elsewhere I think that's a legitimate concern and I think the SEC is doing some stuff to address that first of all though I would question whether the economics of that makes sense for a large customer someone who is going to have to report for the SEC to me it would make more sense for that company to invest in providing that technology and those solutions to its suppliers rather than making these whole scale shifts in its supply chain just based off of that reason the other thing also is that for the large companies based off of the proposed rule only scope 1 and scope 2 are going to have to have to be attested so scope 3 is still going to be estimated and modeled to some degree to Madison's point it will be really helpful for investors if that was done with a transparent and kind of standardized framework but again I think ultimately that shifts the burden more to the reporting company rather than those individual farmers and ranchers so it's a complicated one in ag specifically and I think this is true of a lot of different vertical supply chains but I don't think it's one that the SEC has completely ignored thanks we are close to at time but Madison and Emily I promised you an opportunity to respond so if you have lightning round style responses to which sectors might be affected most I'll be happy to hear from you I guess I just wanted to say that I think ag is a good example of where there's been maybe too much focus on the scope emissions and not on a focus on physical risk like this summer we saw entire herds of cattle just dying and there being like no way to dispose of the bodies and crop yields were down I mean internationally crop yields were down very severely so that highlights a lot of different things that's hard to predict but it really raises questions of resilience and how do you that seems to be a thing that you measure in a different way through like governance mechanisms than you would through a pricing of risks but I'll say my rapid response the only thing I would add is you know the apparel sector is notoriously really takes a lot of water it emits a lot of greenhouse gas emissions so I think that is a sector that we really need to keep an eye on consumers wear clothes right and so it's a global issue and it's really affecting the local communities but we also need to as Ryan said invest in the suppliers that are the mom and pop shops that are offering these goods and services to these global corporations have the global corporations really invest in them share best practices and be that steward that we're involved in talking about great thank you so much for that thanks Madison Emily Jane and Ryan for being fabulous panelists for us today I learned a ton I'm really looking forward to this briefing since we started working on it a couple months ago and just really fascinating looking forward to seeing what the SEC does and keeping up with that so thanks very very much for sharing your expertise and perspectives with our audience today we really really appreciate it I'd also like to extend heartfelt thanks to Representative Castan and his excellent staff for making his participation possible today and thanks for him his leadership generally on climate issues and this issue in particular so I really appreciate that like to also thank my colleagues Dan O'Brien, Omri, Emma, Allison, Anna Savannah and Molly for everything they did to pull the briefing off today I felt a little rusty but they didn't and it was a great event and we couldn't do it without them of course we also have three really cool fall interns Alina, Shreya and Nick and they help out behind the scenes as well helping out with notes and live tweeting and questions and everything like that so this was their first briefing this is the first briefing of the fall semester so thanks very much to them my colleague Dan O'Brien just put a slide up this is a link to a survey if our folks in our audience have two minutes and you'd be willing to share your feedback about today if you had issues with the live cast, with audio, with the video if you have ideas for future briefings if you have just general feedback and so it really matters a lot to us when one of you in our audience takes time to share your comments with us about how things went today we will go ahead and conclude we have a briefing next Wednesday it's catalyzing climate action in K-12 schools it's going to be awesome and then we will be off for a week or so and then it's right into October we're going to be looking at the sixth assessment report nature-based climate solutions loss and damage the negotiations the process itself and what to expect we're really really excited about that you can RSVP sign up for our newsletter and more at www.esi.org I wish everyone a great rest of your Tuesday and thanks again to our great panelists and to Representative Kastin for sharing all of your expertise and perspectives today thanks so much