Bank of America: SEC ‘heading in right direction’ on climate risk rule

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NEW YORK (Reuters) -Bank of America on Friday voiced support for the securities regulator’s proposal requiring U.S.-listed companies to disclose their climate-related risks and greenhouse gas emissions.

The U.S. Securities and Exchange Commission (SEC) unveiled the draft rule last month, aiming to help investors better understand the “actual or likely material impacts” climate-related risks will have on a company’s business, strategy and outlook.

“We think the proposal is constructive and headed in the right direction,” said Paul Donofrio, head of sustainability at Bank of America (NYSE:BAC), the country’s second-biggest bank by assets.

The bank is still reviewing the SEC’s 500-plus-page draft rule and plans to submit a comment letter by the regulator’s deadline.

Among the proposed rule’s key requirements, companies must disclose their own direct and indirect greenhouse gas emissions, known as Scope 1 and 2 emissions, as well as those generated by suppliers and partners, known as Scope 3 emissions.

“We are all in on this notion of companies providing the marketplace with disclosures that will help everybody understand what the emission status is at a company and what their plans are to get to net zero … so that market participants can allocate capital to the best and highest use,” Donofrio told reporters.

Donofrio, who spent six years as the bank’s chief financial officer, cautioned that Scope 3 emissions are currently hard for the majority of companies to calculate accurately but said the bank supports phasing in those disclosures later.

“Scope three disclosures, today, might be subject to a lot of uncertainty, would not get the assurance, therefore not be trusted and it might call into a question other disclosures,” Donofrio said.

He added that the bank supports a price on carbon, which could reflect “its true cost to society so that people will see the value of those investments”.

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