​Norway’s SWF bemoans patchiness of US firms’ climate reporting

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Climate-related data published by listed companies in the US is often incomplete and not comparable, Norway’s sovereign wealth fund has told the country’s markets watchdog in a consultation response.

In a letter to the US Securities and Exchange Commission (SEC) on its consultation of climate change disclosures by listed companies, Norges Bank Investment Management (NBIM) said: “Despite an improvement in companies’ climate-related reporting, there is still significant variation in the quality of disclosure between companies, sectors, and markets.”

“The data published by companies is often incomplete and/or not comparable,” the Oslo-based manager of the NOK11.4trn (€1.13trn) Government Pension Fund Global (GPFG) said.

As an example, NBIM said US firms did not always give sufficient information on how they integrated climate-related factors into business strategies and planning, adding that disclosures of climate-related metrics and targets could also be better.

The central bank department said its assessments showed US tech, telecoms and retail firms to have stronger climate reporting practices than did those in the auto, banking, basic resources, construction, insurance, and oil and gas sectors.

The GPFG is a heavy investor in US listed markets, holding some $399.5bn (€329.7bn) of US equities at the end of last year, alongside about $139.9bn of US fixed-income assets.

As a long-term investor, NBIM said it expected companies to address and report on material sustainability issues that could affect future performance.

“Climate change may give rise to transition and physical risks and opportunities for companies. How these are managed may drive long-term returns for us as an investor,” the SWF manager said in the letter, signed by NBIM chief governance and compliance officer Carine Smith Ihenacho and Severine Neervoort, senior analyst, corporate governance.

Corporate reporting on sustainability issues in general had to be better in the US, the pair said – beyond just climate change.

“Therefore, we would welcome clear disclosure requirements for all sustainability matters financially material to a company,” Smith Ihenacho and Neervoort wrote.

Sustainability information had to be consistent and comparable across companies and over time if it was to support investment decisions, risk management processes and ownership activities in a diversified portfolio, the pair said.

They told the watchdog it could ask listed companies to use the Task Force on Climate-related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board’s (SASB) standards for their reporting.

On Monday, NBIM published a consultation response it wrote to the SEC’s counterpart in China, in which it also pushed for improvements in listed companies’ ESG reporting.