Areas including Eastern Washington’s Methow Valley are at greater risk of wildfires as the planet warms. (Brent Roraback Photo)

It’s little wonder that Microsoft is in favor of the Securities and Exchange Commission (SEC) creating robust regulations for publicly traded companies to report on their climate impacts and risks. The Redmond, Wash.-based company is already a leader in the space, voluntarily tracking and sharing its carbon footprint as it strives to be carbon negative by 2030. And the software and cloud powerhouse sees a role for itself in building technology that can automate the process of emissions accounting and reporting.

So is Microsoft’s support for SEC climate disclosure rules purely self-interested? President Brad Smith scoffs at the notion.

“I look at this as something that is self-serving to every human being on the planet,” he said in an interview with GeekWire, “because I think every human being has a self-interest in ensuring that this planet is going to continue to be a place that is easily habitable for humans.”

That habitability is increasingly imperiled. Despite the emissions slowdown caused by the COVID pandemic, the world recently hit a new record for atmospheric carbon dioxide — reaching levels not seen on Earth for millions of years. This summer, Western states are setting their own records for high temperatures and drought conditions.

In March, the SEC put out a call for comments on the climate disclosure regulations, noting that over the past decade “investor demand for, and company disclosure of information about, climate change risks, impacts, and opportunities has grown dramatically.” Microsoft, Apple and other tech companies shared their input this month.

One of the big challenges in this area is making sure that companies are calculating climate information in a manner that’s accurate, consistent and comparable to others. Right now there are a variety of standards and frameworks for tracking climate impacts. New SEC rules could standardize that.

Reliable climate data allows investors to identify which companies are at lower risk of climate-related harm from a financial perspective, as well as which businesses align with their environmental values. More broadly, Smith imagines a scenario where information on carbon impacts could be included on product labeling to help shoppers make climate-driven choices just as health-conscious consumers rely on nutrition labels.

“We support regular and consistent reporting of climate-related matters to complement the significant actions we each are taking to address climate change,” reads a letter collectively submitted by Amazon, Alphabet (parent company of Google), Autodesk, eBay, Facebook, Intel and Salesforce.

“We believe that it is critical to regularly measure and report on our progress towards our climate commitments and to share updates with investors and other stakeholders,” the letter continues. “We believe that in order for such disclosures to be meaningful and comparable, they should leverage widely recognized frameworks and standards when possible.”

Left to right: Microsoft President Brad Smith, Chief Financial Officer Amy Hood and CEO Satya Nadella announce Microsoft’s plan to be carbon negative by 2030. (Brian Smale / Microsoft Photo)

In the past, Amazon was criticized by some employees and others for failing to disclose its climate information. In 2019, the Seattle-based business began to dramatically change course, announcing its goals for climate neutrality and urging others to do the same.

Smith said the tech sector was generally in agreement in its opinions about the SEC regulations and in taking action on climate issues — and that the technology companies were not alone.

During the Trump administration, as the U.S. government was pulling out of the Paris Agreement and taking other steps to unwind climate progress, American businesses continued to lean into their commitments to cut carbon emissions, Smith said. “It sent the message that as a country, there were a great many important institutions that remained committed to the cause,” he said.

Now that President Biden is pushing for strong action on climate, the role of businesses has changed, Smith said.

“Something like carbon accounting and measurement and recording and reporting is something that at one level can be mandated by governments,” he said, “but governments are not necessarily in the best position to figure out how to get it done. And the more [the business community] can do that, the easier the rest of this can come together.”

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