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BlackRock Urges SEC to Change Climate-Risk Disclosure Plan

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(Bloomberg) -- BlackRock Inc. is pushing back on key parts of the US Securities and Exchange Commission’s bid to get publicly traded companies to track and disclose their greenhouse gas emissions.

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The agency’s approach threatens to increase compliance costs for firms and may unintentionally make it harder for investors to discern information that’s significant to a company’s bottom line, BlackRock said in a letter to SEC. The firm, among the leading advocates for sustainable investing, said it supports the overarching goal of having public companies disclose climate-related information.

The letter is one of many filed with the agency last week in response to its March proposal to force companies to include the data in annual reports and other filings. The effort is a cornerstone of the agenda of SEC Chair Gary Gensler, who has argued the disclosures are a vital tool for investors to make informed financial decisions.

While Republican lawmakers and businesses groups have submitted letters to the SEC rejecting parts or all of the proposal, the pushback from BlackRock is notable because its the world’s biggest asset manager.

Nasdaq Urges SEC Not to Move Ahead with Climate Disclosure Plan

Parts of the proposal “will decrease the effectiveness of the commission’s overarching goal of providing reliable, comparable, and consistent climate-related information to investors,” a group of BlackRock executives led by Paul Bodnar, global head of sustainable investing, wrote in the letter.

If the SEC goes beyond international efforts, the changes could “obscure what information is material, have limited value to investors, heighten compliance costs and reduce the ability to compare across companies and regions,” BlackRock said in the June 17 letter that it disclosed on its website Tuesday.

The SEC declined to comment.

BlackRock urged the SEC to revamp its proposal to provide more flexibility to companies in how they report the information and to better align with global efforts. Without the changes, the asset manager said the plan could harm capital markets and even discourage private firms from going public.

The SEC should also allow companies to file certain climate-related information in a way that carries less legal liability than annual reports or registration statements, BlackRock said.

The investment firm also called for the agency to drop its plan to require larger companies to disclose so-called Scope 3 emissions. That pollution is generated by other firms in their supply chain or customers using their products, and business groups say that information is particularly hard to quantify. BlackRock instead suggested a framework where a company would disclose Scope 3 emissions or explain why it didn’t do so.

(Updates with SEC declining to comment in seventh paragraph and additional information from BlackRock letter in final paragraph.)

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