Citing stakeholder confusion related to the cost and usefulness of certain climate-related information, the American Bankers Association this week urged the Global Reporting Initiative to enhance its education efforts and due process in evaluating climate disclosure proposals.
GRI, an independent organization that works closely with United Nations affiliates, is a leader in setting disclosure standards related to sustainability-related information. Its voluntary standards have been used as a basis for required standards in various locations. Much of the information required in the Securities and Exchange Commission’s recently rescinded 2023 climate disclosure rule, for example, was based on GRI standards.
ABA recommended that education efforts be expanded by GRI so stakeholders, including investors and regulators, can better understand the limitations banks have in driving macroeconomic transitions. Specifically, “…banks’ primary role is to support their clients by financing the real economy transition activity of those enterprises. Banks are unable to dictate or otherwise compel transition activities by their customers… Due to these dynamics, financial institution transition plans and their financed and facilitated emissions targets are not achievable on their own.” Certain GRI standards, for example, require disclosures of emissions of bank borrowers by industry, implying targeted reductions can be achieved in a safe and sound manner solely through bank strategies and actions.
ABA also cited current actions in the European Union to delay and reduce the scope of required sustainability reporting, indicating that insufficient review had been initially conducted of the costs and benefits of such information. While such a review is not necessarily the sole responsibility of GRI, ABA recommended that GRI expand its due process to include such a review.
