This post is based on a comment letter submitted to the SEC regarding The Proposed SEC Climate Disclosure Rule by the Investment Company Institute. Below is the text of the letter with minor adjustments to eliminate the correspondence-related parts.

The Investment Company Institute is writing to provide our views on the Securities and Exchange Commission’s proposal to require public companies to provide investors with consistent, comparable, and reliable information related to climate-related risks. Our members, US regulated funds, on whose behalf we write today, hold total assets of $29.7 trillion, serving more than 100 million investors. They clearly have a significant interest in how the nature and availability of climate-related risk information provided by public companies evolves. Fund managers analyze this, and other, information in formulating their investment decisions on behalf of those millions of long-term individual investors.

Executive Summary

Our comments on the proposal are based on our belief that any climate risk disclosure framework should be designed in a manner that:

• provides investors with information that is consistent, comparable, and reliable;
• promotes investors’ ability to efficiently allocate capital;
• distinguishes between material and other information;
• reflects an appropriate balance of costs and benefits;
• considers the importance to investors of a global baseline of sufficiently comparable reporting requirements across various jurisdictions to avoid regulatory and market fragmentation; and
• is sufficiently flexible to respond to changing circumstances.

The Commission’s proposal advances some, but not all, of these goals. We therefore express support for several elements of the proposal and recommend modifying other aspects to more effectively align with those goals. In addition, in an appendix to this letter, we explain the importance of the Commission adhering to the materiality standard that underlies the federal securities laws in designing any final rules.

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