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Time for Climate Transparency
It’s the right step not just for business but nonprofits too
Last month, the World Resources Institute (WRI) backed an SEC proposed reg that would require companies to disclose carbon emissions and associated plans to reduce them in a uniform and comparable way. As WRI put it, while they often advocate for the radical change that is so badly needed, this step is actually just “plain common sense.” I agree. In my view, disclosures should be table stakes for addressing the climate crisis. And if that’s the case, shouldn’t everyone have to put them down?
Environmental orgs have rightfully pressed business for greater, more uniform disclosures so their emissions can be readily understood and compared, on the theory that this level of transparency will ultimately serve to accelerate emissions reductions. Now that the SEC seeks to make such disclosures mandatory, we should see more compliance on this front. There are comparable initiatives underway around the world. All good news.
But let’s press on.
Rather than just advocating for businesses to disclose, NGOs and foundations should join in and submit to those requirements as well. They can help lead the way by providing such disclosures themselves.
Walking the walk this way would reinforce the importance of the initiative, enhance NGO credibility, and leave no daylight between their positions.
The current status of NGO and foundation disclosure is actually very mixed. Some in the enviro community disclose a lot, some very little or nothing, and most of the disclosures are not uniform or comparable.
Subjecting themselves to a rigorous disclosure practice would also make NGOs much more informed about the challenges businesses face in doing this right now. For instance, some business leaders, such as BlackRock, have argued that the SEC’s disclosure mandates go too far and that some of it is not practicable (like getting audits for scope 3 emissions). NGOs will have a much more nuanced perspective on their concerns and be able to propose more feasible solutions if they’ve been through the experience.
Taking it even further, NGOs and foundations could commit to a common reporting standard for their climate projects so the public would finally be able to evaluate who does exactly what (just like NGOs ask business to do).
If this seems like a herculean task, there’s one nearly foolproof method to imposing a new standard: have a major donor — say the Bezos Earth Fund — ask all of their grantees to do this and actually enforce the requirement. I’ve suggested this before. Yes, this is a lot of paperwork and processing on them. But if you think of all the positive downstream effects this would have, it seems like a well placed investment to me.
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