Saving Humanity with Corporate Environmental Disclosure (or at least helping a little)

Overview

This post tries to answer the question: what regulatory framework would lead to good corporate environmental disclosure?

You might rightfully ask, why should I care about corporate environmental disclosure? Well, current corporate environmental disclosure, when it exists, can be hard to find and is disorganized, incomplete, unverified and often unverifiable. Getting good corporate environmental disclosure is important because it will increase transparency about society’s use of constrained resources, provide information for decision-makers to implement practical solutions to resource-constraint problems, and help concerned citizens hold environmental laggards accountable for their failures. Moreover, corporations shoulder most of the costs of providing good corporate environmental disclosure, which is one small step in getting companies’ to internalize the environmental costs of their operations.

What follows is a discussion of background on ESG and corporate disclosure, followed by a broad comprehensive outline for an effective regulatory approach to corporate environmental disclosure. The regulatory approach provided here is not the only possible effective approach to environmental disclosure. However, the current approach is unacceptable.

Background on ESG

ESG is an acronym for Environment, Social and Governance. If you are not already familiar with ESG, you might be familiar with Corporate Social Responsibility (“CSR”), which is ESG’s intellectual predecessor. ESG and CSR are very broad umbrella concepts. Discussions of ESG and CSR essentially ask corporations to incorporate considerations that are important to stakeholders – whether they be: communities impacted by climate change, citizens living in the neighborhoods around corporate headquarters, or people who do not buy but still interact with a company’s product or service – whose interests have not historically been incorporated into corporate decision-making. Particular interests and issues that fall under the ESG umbrella, such as greenhouse gas (“GHG”) emissions and toxic waste, have been recognized for many decades, but the current vernacular has been infused in corporate insiders’ vocabulary over the past 2 decades. ESG issues were incorporated into the 2006 United Nation’s Principles for Responsible Investment, and investment that explicitly incorporates ESG analysis has skyrocketed in the past several years and now represents about 1/3 of all invested capital in the world’s largest markets. 

Background on Corporate Disclosure

Corporate disclosure can be esoteric and complex. The basics, though, are simple. Whenever a company wants to sell ownership interests to the “public” – think people without a special relationship with the company or lots of money – the company is required to publish disclosure documents with information about its financial condition and results of operations. After a company sells those ownership interests, after it “goes public,” it continues to publish reports on its financial condition and results of operations every three months. Company reports are standardized and published on a website maintained by the Securities and Exchange Commission (the “Commission”).

These reporting requirements are overseen by the Commission. The Commission gets its power to adopt disclosure rules from two governing statutes – the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act,” together with the Securities Act, the “Acts”).

The Acts provide the Commission with limited authority. It can only ask for certain information from companies. In their most essential form, the reporting requirements of the Acts require companies to disclose information material to their financial condition and results of operations. The “materiality” framework is useful to investors. It balances specificity (e.g., what is a company researching and developing) and comparability (e.g., how much do companies’ spend on research and development). Since the disclosure regime provides comparability, it also supports reliable assurance of companies’ disclosure by financial auditors, reducing the scope for misuse of funds and fraud. It also limits the need for companies to develop and write ever-expanding disclosures with incidental minutiae, and thereby focuses readers’ attention on the current and future developments that are most likely to impact cash flow and expenses.

With this background, it becomes clear why ESG disclosure, and environmental disclosure in particular, has historically been non-existent, and is now often hard to find, disorganized, incomplete, unverified and/or unverifiable. Many of the environmental problems society confronts were never incorporated into company disclosures because they were externalized from company financials. Environmental problems and solutions were, and are, not “material” to companies’ financial condition and operating results, and there is no other regulatory regime that requires companies to disclose ESG information in a systematic way. Many companies provide environmental disclosure voluntarily through “CSR Reports” posted to their websites but, without rules around what they need to disclose and how to disclose the information, these reports often lack useful information.

The Problem with Materiality

There is a fundamental mismatch between the Commission’s “materiality” touchstone and the decision-useful information that society needs to design effective responses to environmental challenges.

As mentioned above, many of the environmental problems society confronts were never incorporated into company disclosures because they were externalized from company financials. Carbon emissions were never incorporated into oil companies’ or car manufacturers’ costs. The monetary cost of plastic is immaterial in part because plastic is the cheapest form of packaging, while the environmental cost of plastic waste is not incorporated into fashion houses’ or food manufacturers’ costs. The harm from the accumulation of nitrogen in soil is not accounted for in agricultural conglomerates’ financial statements and, to the extent they sell fertilizer that causes the problem, the environmental harm transforms into a perverse reward.

Even when environmental costs are incorporated into companies’ financial condition and operating results, materiality disclosures do not provide a robust description of how companies act today to reduce environmental impacts and invest for a sustainable future. The electrified ground vehicles that an airline brings into service are not material to that airline’s operating results. Companies’ investments in buildings certified as meeting Leadership in Energy and Environmental Design (LEED) standards are often not material to their financial condition and operating results. Yet these actions are key pieces to the puzzle for each company to transition from its current extractive environmental footprint to a sustainable model.

Moreover, the materiality of important environmental considerations to any company’s financial condition and results of operations is not a helpful lens through which to assess what companies should disclose. The materiality standard is designed to provide company-relevant information rather than socially-relevant information. The Securities Act and the Exchange Act, and other similar regulation, are designed to protect investors by ensuring that they have the appropriate information about a company to transact in securities of that company.  In contrast, information about companies’ environmental impact is often immaterial not only to the company in question but also to the larger, global effort to reduce our environmental footprint. Instead of providing information to investors who want to transact in securities, the purpose of environmental disclosure should be to provide decision-makers – both public and private – with appropriate information about environmental best practices, benefits and costs of those practices, and transparency about investments in immediate and future solutions. 

Rather than empowering individual investors to make informed investments in individual companies, environmental disclosure rules need to empower leaders at other companies and in government to develop their own comprehensive and effective sustainability plans.

Current Environmental Disclosure Context

With the inauguration of Joe Biden’s Presidential administration, the Commission has increased its focus on environmental, particularly climate change, disclosure by public companies. Throughout 2021, the Commission scrutinized companies’ environmental disclosures and, in March 2021, asked the public for input on what new environmental disclosure rules it might promulgate.

The Commission’s request for public comments was a crowd-sourced brainstorming exercise. The Commission asked the public several questions, including: whether rules should be mandatory or optional, if rules should be either generally applicable or industry specific, what information should be disclosed and the preferred level of detail for such information. The public provided thousands of comments. Then, towards the end of 2021, the Commission’s staff began developing new environmental disclosure rules, which should be announced in early 2022. While the exact form that the Commission’s new environmental disclosure rules will take remains unknown, it seems likely that the rules will (1) adopt the same basic “materiality” standard as the current disclosure regime and (2) that environmental disclosure will be required within disclosure documents that must currently be filed with the Commission.

Legal Limitations to the Adoption of a Comprehensive “E” Disclosure Regime

As might already be clear from the summary of current disclosure law, above, there is a straightforward legal rationale to believe that the Commission’s environmental rulemaking will be confined to its current, insufficient, “materiality” framework. The Securities Act and the Exchange Act do not provide the Commission with unlimited power to solicit any information from companies in any way. There are some arguments that the Commission has the power to adopt some of the aspects of a robust environmental disclosure regime, but there are also arguments that the Commission currently lacks the power to adopt most, if not all, of what a truly robust environmental disclosure regime requires. The Commissioners and Commission staff are well-aware of these limits and are also cognizant of the fact that the current Supreme Court might look skeptically at expansive interpretations of agency power adopted by the agency itself. Nobody wants to put in substantial effort to adopt and implement new rules, only to have such rules struck down by the Supreme Court mere months later. These legal limitations mean that Congress likely needs to pass a law that grants the Commission the power to adopt rules to design a robust environmental reporting regime.

If simply commingling environmental disclosures into the Commission’s materiality disclosure framework will not provide effective disclosure, and the Commission appears set to adopt just such ineffective rules, then what exactly does good environmental disclosure regulation look like?

What follows below is a comprehensive outline for a regulatory approach to the problem. This is not the only possible effective approach to environmental disclosure. And, as noted above, the only way to design a lasting comprehensive environmental disclosure regime, shielded from trimming by the Supreme Court, is with congressional authorization.

Effective Environmental Disclosure Regulation

Socially Important Disclosures (SIDs)

Environmental disclosure regulation can incorporate the effective aspects of current materiality disclosure. Most importantly, in the same way that current disclosure is keyed to materiality on financial condition and operating results, the Commission should specifically define certain “Socially Important Disclosures” (“SIDs”) so that companies focus their attention on disclosure of the most material environmental problems that we face today. Environmentally-specific SIDs will ensure that readers can readily digest and interpret the disclosures, facilitate comparability and assurance of environmental disclosures, and circumscribe the cost burden imposed on companies. Given the importance of the SIDs in this disclosure regime, there will inevitably be some debate about what should be included. Before presenting a proposed list of SIDs, it is important to note that any actual rules will be subject either to legislative negotiation or a public notice-and-comment rulemaking process, either of which will socialize and expertise the process of deciding what aspects of environmental stewardship are important to disclose. Also, regulatory requirements are minimum requirements, which leave scope for investors and stakeholders to pressure companies to, and for companies to actually, disclose more and different information.

A helpful list of SIDs, developed with reference to the overuse of limited resources expounded in Kate Raworth’s “Doughnut Economics,” is:

• Annual greenhouse gas emissions;

• Percentage of products (by value and volume) purchased and sold annually that incorporate chemicals that are either (1) untested for human health effects or (2) tested and toxic;

• Annual tons of phosphorous and nitrogen added to soil;

• Annual clean water usage;

• Acres involved in the supply chain during past year that were formerly forests; and

• Tons of plastic in products (by value and volume) purchased and sold annually.

Whatever SIDs specifically cover, they should be broad enough that they apply generally across industries and dictate comparable disclosures, yet specific enough to provide decision-useful information to readers of the disclosures.

Targets

Disclosure of SIDs must be coupled with clear targets. Companies should be subject to achieving minimum targets that are linked to recognized international and national targets, and scale such targets as companies evolve. Emissions-reduction targets should flow down from the United States’ commitment under the United Nation’s 2015 Paris Agreement, also known as the Paris Climate Accord, through national law in the form of Commission disclosure regulation setting a minimum net-zero target, and into companies’ emissions targets. Other targets require more development. Fundamentally, companies must adopt ambitious targets (i.e., targets that require otherwise unanticipated changes from the status quo of business operations) for every SID.

To help ensure that general SID targets set by the Commission are ambitious for all companies covered by the SID regime, companies should be required (1) to announce SID targets that go beyond the Commission’s minimum targets and (2) explain their reasoning if they do not announce more ambitious SID targets. This type of “comply-or-explain” regulation is already established practice in disclosure regulation, and matches the benefits of generally-applicable rules with a light-touch opt-out mechanism that promises to provide helpful information about what SID targets companies and industries find ambitious or not.

Additionally, SID targets should be agnostic to the size of the companies that are subject to SID reporting requirements. Disclosures from the largest company in an industry should be directly comparable to disclosures by its competitors. To achieve comparability, regulation should require that SID targets and related disclosures be made on a unit-economics basis (i.e., emissions per unit sold) as well as providing company totals.

SID regulation itself does not necessarily need to develop particularized disclosure accounting that dictates how to make unit-economics disclosures. There are already other projects underway, such as the Task Force on Climate-Related Financial Disclosures and the Sustainability Accounting Standards Board, that can develop the appropriate standards at lower levels of granularity, and whose standards can be incorporated by reference into the rules or left for companies to adopt voluntarily as the most appropriate accounting standard for them within the SID framework.

SID targets will inevitably be imperfect. For some people, they may not be sufficiently ambitious. For others, they may seem unrealistic. The targets may be imperfectly tailored to match society’s resource utilization that the world can sustainably support. Nonetheless, targets are useful. Importantly, targets incentivize behavior towards achieving the measured outcome (i.e., they encourage people to in the right way). Colloquially, “What gets measured gets done.” Quite frankly, humanity has several important-to-existential resource utilization problems to solve and information about what companies are doing to solve each of these problems is obscure. When the information is available, it is fractured and incomplete. Society needs betters systems to both identify solutions and put them into action, as well as understand the projected costs and current investments that will bring modern economic activity into environmental limits. Specific SID targets across the spectrum of environmental concerns, however imperfect they are initially, are a step in the right direction.

Moreover, SID targets can provide a benchmark to measure specific real-world progress. Progress towards targets will tell us whether the targets were not ambitious or were unrealistic. Changes to society’s resource utilization as companies transform their operations to incorporate the practical operational implications of the SID targets will tell us whether the targets need to become more stringent or can be relaxed. Empowering the Commission to adjust the SIDs over time will help ensure that they respond to society’s changing needs.

Business-as-Usual and Closing the Gap

SID targets must be coupled with realistic projections of resource utilization.

The first projection that companies must provide is the “business-as-usual” resource-utilization projection. For each SID target, a company needs to show how its current operations compare with the minimum SID target and any better target that they have adopted.

Ideally, companies would provide details about their operations that contribute most significantly to their SID utilization. Such disclosure needs to be circumscribed in some way. It is impractical to ask companies to account for every SID three or four steps down a supply chain. One scope limitation in the emissions reporting context would be to limit disclosures to “Scope 2” emissions – a commonly recognized standard for calculating greenhouse gas emissions. Similarly, reporting on land use could be circumscribed by looking to primary suppliers and/or at the suppliers’ economic importance to the reporting company. Within the reporting scope of the SIDs, the Commission could require companies to disclose all SID-relevant operational detail subject to a “Competitive Immateriality” standard, discussed below in more detail, whereby companies would need to disclose all details of their operations related to the SID, except to the extent such disclosure might put the company at a competitive disadvantage.

Companies must then also disclose concrete plans to close the gap between their business-as-usual projections and the SID targets. How does the company plan to reduce water usage next year? What investments is the company making to reduce water usage over the next five years? What technologies does the company view as most promising for reducing its water usage in ten years? And, how, and how much, do each of the specific things that the company identified close the gap?

Disclosure about the practical steps and promising technologies to close the gap is important but still insufficient. Closing-the-gap projections must be paired with the benefits and costs of taking such actions and making such investments. If technologies that the company thinks are necessary to close the gap are not yet commercially viable, the company should provide a projection – either developed internally or with reference to an external source – of the investment required to make the technology viable, both at the company level and more broadly.

Quantifying the costs to take the steps to close SID target and business-as-usual gaps is fundamentally important to the entire disclosure project. Through the simple act of disclosure, companies will help decision-makers better understand what is achievable today and the scale and type of investment required to make progress tomorrow. We might imagine an SID target that turns out to be unrealistic – companies cannot meet the target in the prescribed time frame – and social resource utilization spirals further outside sustainable limits. Companies’ disclosures about the solutions available and their related costs might tell us that a major technological breakthrough is emerging and requires relatively little investment to commercialize, or it might show a growing gap between practical actions that can be implemented now and the amount of investment in new technologies needed to solve the problem. Either way, the information empowers leaders to develop comprehensive and effective sustainability plans.

Competitive Immateriality Standard

Exactly how much operational information must companies disclose to provide context about the factors driving their SID gaps?

The easiest standard to adopt would be analogous to the “materiality” standard required in current disclosures. Just as companies need to disclose anything material to a decision to invest in their securities – i.e., anything material to their financial condition and operating results – SID rules could require companies to disclose anything material to understanding their SID use. However, this is a bad regulatory approach. “Materiality” is a term of art for securities and disclosure lawyers that has almost 100 years of regulatory history and litigation-interpretation influencing companies’ financial disclosures. As noted earlier, one of the key reasons that environmental costs have not been included in company disclosures before now is that such costs were, and are not, material to companies’ financial condition and operating results. Developing an SID materiality standard, separate from the financial disclosure materiality standard, would introduce a confused double-meaning of materiality within disclosure regulation.

A better approach is to require companies to disclose all relevant operational and investment details related to SIDs that is “Competitively Immaterial”. The Immateriality Standard, referred to as such to contrast it with the financial materiality disclosure threshold, would allow companies to exclude pertinent operational or investment details from SIDs to the extent that disclosure of such information would cause material competitive harm to the company. The Immateriality Standard is specifically included in this proposal to alleviate company concerns that they might be forced to disclose competitively harmful information under this new disclosure regime.

The concept of an Immateriality Standard is not new. Today, companies must file various documents as exhibits to filings with the Commission and they may redact information from those disclosures that might be competitively harmful.

Companies might also be concerned that the requirement to disclose “all relevant” operational and investment SID details would be overly burdensome. Similarly, readers of SIDs might be concerned about sifting through a crush of irrelevant information. SIDs could very well include a minimum standard for the information that needs to be included. The main point here is that it should be a different concept from “materiality” for conceptual and linguistic clarity. Still, concerns about overly detailed and burdensome disclosure under the proposal described here is unwarranted.

SID Liability

Particularly, the facially broad requirement to disclose “all relevant” information can be balanced with a liability regime that recognizes, at least initially, that SIDs are a new and developing area of disclosure. That said, incorporating a practical threat of liability is also important. The SID rules are not targeted at companies that already do a good job of disclosing environmental impacts – although the SID rules should enhance and standardize the best disclosures – they are targeted at laggards who may not comply without extra incentives.

As with many disclosure rules, the SID regime can be implemented over time, with longer compliance periods for smaller companies.

Once the SIDs are implemented, companies should be subject to liability for inadequate disclosure if, and only if:

• The company does not adopt disclosure for an SID at all. Companies for whom certain SIDs are not relevant can simply note the irrelevance of such SID in the disclosure.

• The company fails to obtain third-party assurance that the company’s “business-as-usual” SIDs are materially accurate. 

• The company’s “closing-the-gap” projections do not, on their face, provide a plan to meet the sustainability targets without explaining why the gap exists. Companies should be encouraged to show where they think gaps persist because the existence of such a gap implies the need for significant long-term investment to resolve the resource constraint.

Initially, the power to hold companies liable can rest with the Commission, and fines for non-compliance can escalate with each instance of non-compliance, from minimal to punitive.

Two other important factors interact with the liability proposal described above.

First, as mentioned in passing, companies should be required to obtain assurance that their “business-as-usual” SIDs are materially accurate. Assurance is a standard and important part of company financial reporting. Financials are reviewed and certified by independent accountants, who also help companies develop robust operational reporting functions to translate the company’s operations into consistent and reliable disclosures. Assurance for SIDs is in its infancy. Few companies that currently provide environmental disclosures obtain third-party verification of their disclosures. When there is assurance of environmental disclosures, it ranges from “we [the auditors] are not aware of any material misstatements” to “this disclosure is materially accurate.” There is no operational template for companies to develop procedures that assure consistent and reliable disclosures over time, much less for a third-party to audit the procedures or disclosures coming out of such procedures. Given the practical difficulties facing companies and their SID auditors, until SID practice becomes more professionalized and standardized, the required assurance of “business-as-usual” SIDs should only be a negative assurance (i.e., that the auditor is not aware of anything that would cause them to come to a materially different result).

Second, market participants like investment advisors and proxy advisory firms will almost certainly grade the plausibility of companies’ closing-the-gap plans and other SIDs as long as the rules bring appropriate and comparable information to the public. The combination of private assessment mechanisms along with investment and policy reactions to the disclosures will help hold companies to account when they fall short.

Covered Companies

Which companies should be covered by the SID regime?

As explained earlier, the purpose of SIDs is fundamentally different from the purpose of other disclosures required by the Commission. Traditional company disclosure focuses on informing the investor who wants to invest in a company. SID focuses on informing decision-makers who need to synthesize information about resource constraints to make investment and policy decisions. Therefore, the companies covered by SID regulation should not be coextensive with the companies that are currently required to file disclosures with the Commission.

One practical standard is to adopt a minimum revenue figure, above which companies must provide SIDs. For example, if a company first achieves annual revenues of $100 million in 2022, then they would be required to produce SIDs reflecting 2023, and such SIDs would probably be published in early 2024. For an idea of the companies that would be impacted by such a rule, in 2012 there were about 2,600 companies in the United States with revenues above $100 million.  By comparison, there are anywhere from 4,000 to 5,000 companies that file disclosures with the Commission. Therefore, an SID reporting threshold of $100 million in revenue would impact only those companies that are the most economically significant and that have the resources to develop an operational SID function.

To complete the rule description, once companies reach $100 million in revenue, they could remain subject to the SID requirement until the year in which they drop below $75 million in revenue. This differentiation between the threshold at which companies enter and exit the SID reporting regime is helpful to companies themselves because it provides certainty about whether they need to produce SIDs even if their revenue fluctuates around the entry threshold. The differentiation is also helpful to expand the base of SIDs over time, as some companies fall under the $100 million revenue threshold but remain reporting companies.

Ultimately and appropriately, the exact reporting threshold would also be subject to legislative negotiation or administrative refinement to strike the appropriate balance in regulatory goals. On the one hand, getting robust SIDs is important. On the other hand, allowing smaller companies to maintain competitiveness and encouraging private companies to access public capital markets are both legitimate and important policy goals. The goal here is simply to describe a workable, comprehensive and effective framework for SIDs.

The Disclosure Document

SIDs should be disclosed in a separate document from traditional financial disclosure documents filed with the Commission. As explained, the purpose of SIDs is different from financial disclosures. Thus, the threshold for a company to be subject to SIDs should be tailored to the purpose of the SIDs and not related to financial reporting. A separate disclosure document would make disclosure simple for companies that are subject to SIDs but not subject to other Commission reporting, and vis versa.

Companies’ CSR Reports are the perfect conduit for good corporate environmental disclosure. SIDs should be the regulatory framework that improves, professionalizes and standardizes CSR reports. We can call the new-and-improved versions “SID Reports”.

Combining SIDs into current Commission reporting would undermine both SIDs and financial reporting. Regular financial reports are due on a standard periodic cadence. As mentioned, companies have developed complex and specialized functions to ensure that financial disclosures are produced in accordance with that standard periodic cadence. There is no good reason to subject SIDs to the same reporting cadence as financial disclosures when we do not yet know exactly what the operational requirements are to implement robust SIDs. Moreover, periodic financial reports can already be over 100 pages long. Adding SIDs would dilute the focus of financial disclosures while also diluting the focus of SIDs.

SID rules should require that SID Reports be filed with the Commission as PDF files. Currently, CSR Reports are posted to company websites. Sometimes, CSR Reports are nestled behind three links, the first of which is in fine-print at the bottom of a webpage. Getting SID Reports filed with the Commission would ensure visibility of individual companies’ reports and also provide a centralized repository from which interested parties can pull information.

The Disclosure Burden

Can you hear the objections to overly burdensome government-imposed disclosure requirements floating down from corner offices?

The development of a robust SID regime will require companies to invest in a specialized disclosure function. Leaders in environmental stewardship and disclosure have already made some of the investments needed to gather, use and communicate the appropriate information. They will likely need to invest even more money in their environmental disclosure function. Laggards will need to invest much more money in environmental disclosure. The investments are worthwhile.

Companies, particularly large companies, function in part as disclosure bureaucracies. They are very good at financial disclosure – they disclose complete, accurate, reliable and comparable information like clockwork. The development of those disclosure capabilities took decades and developed in the years following passage of the Securities Act and Exchange Act. Those two Acts passed because Congress thought protecting investors was important enough to require companies to develop disclosure functions. Congress was right, as proven by the exposure of giant frauds like Enron, among others. Congress would again be right to give the Commission authority to design a comprehensive environmental disclosure regime. Congress could not foresee the breadth and depth of the environmental externalities imposed on society by industry nearly 100 years after it passed the Acts – hence the legal debate about the scope of the Commission’s power to require and regulate environmental disclosure. Now is the time for Congress to take action to make clear that environmental disclosure should be taken just as seriously as the professionalization of corporate financial reporting shows that disclosure can be, because environmental reporting is just as important to society as financial reporting is to investors.

While a robust SID regime will require investments by companies, the costs should not be overstated; the benefits outweigh the costs. In terms of providing decision-useful information to stakeholders and decision-makers of all kinds, very few actors are better placed than companies, which can aggregate first-hand accounts of their own activities and have more supply chain visibility than third-parties or consumers. Thus, we can expect to get more information from companies than we could from other parties, and to get the same information at a lower cost. Moreover, the development of corporate SID functions will create an innovation marketplace to lower the cost of gathering, using and communicating the information. For example, companies are already launching satellites that can monitor emissions from individual buildings around-the-globe and track ships as they traverse oceans. These providers are on the cutting-edge of monitoring technology that the largest companies might leverage to communicate their environmental footprint to the public and reduce that footprint over time. A robust SID regime would not only spur innovation but would also expand the cohort of professionals with a deep and nuanced understanding of the environmental constraints that we face and solutions at our disposal. Finally, it is important to recognize the benefits of creating a better decision-useful information ecosystem. The benefits of such an ecosystem are acknowledged both explicitly and implicitly in the purpose and structure of the Commission’s governing laws and rules. The Commission is well-positioned to create a database of reliable, comparable and comprehensive environmental disclosures that can help inform both investment and policy decisions. Congress should empower it to do so.