Oct 26, 2022 - Economy

NYSE president Lynn Martin voices caution on ESG disclosures

New York Stock Exchange president Lynn Martin warned this morning at the Axios BFD gathering that tracking certain supply chain emissions poses a particular challenge to some businesses.

Why it matters: The comments come as the SEC hammers out new rules for public companies to disclose their carbon emissions and climate risks.

  • Some companies are feverishly lobbying the agency to water down the regulations.
  • Martin spoke with Axios' Hope King about market conditions and how companies are incorporating ESG principles.

Zoom out: Martin drew a contrast between the "social" and "environmental" planks of ESG principles.

  • "I don't think anyone can argue the positive effects that, for example, diversity and including additional diversity has had on business," she said.
  • "Environmental is a bit stickier, only because some of the disclosures are not yet ready to be measured accurately and disclosed. Specifically, something like Scope 3 emissions."
  • "To accurately disclose that, you need to have all of your suppliers accurately disclose that. That's something that's really challenging for some businesses.
  • "So, it's not that CEOs are not looking to disclose additional information and then let the market decide whether it's valuable or not valuable. It's more that they're trying to figure out how to accurately disclose those sorts of metrics in the market."

Between the lines: The SEC is proposing regulations that, for the first time, will require companies to disclose their greenhouse gas emissions as well as their exposure to climate change risks.

  • A big issue is whether they'll cover "Scope 3" emissions, which spans from how a company's products are made and shipped to how they are consumed.
  • Those emissions can be the lion's share of a company's carbon pollution — as much as 95%. But they're also difficult to measure, and few companies closely track their supply chains.
  • That's opened a new market opportunity: A host of companies such as Sweep and Persefoni offer to track emissions across supply chains.
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