How Extractive Industry Won the War Against ESG

Source: How Extractive Industry Won the War Against ESG

This week the Security and Exchange Commission’s long-awaited guidance on climate risk disclosure, or as it’s better known Environmental Social and Governance (ESG) risk indicators, was released. After a two-year attack from extractive industries and the pundits and politicians on their payroll, the SEC caved and left out what are called “Scope 3” emissions.

We’ve talked about this before, but just a quick refresher on Scope 3: Scope 3 emissions are a company’s supply chain emissions. So they include everything that goes into making it and using it, both upstream and downstream emissions. That’s a big deal for all sorts of polluting industries; the oil and gas folks would rather keep things focused upstream, where they can talk about how they’re reducing the “carbon intensity” of pumping oil and ignore what happens when people use their product, while big ag likes to keep things focused downstream where they can point people’s attention toward sustainable packaging or reduced shipping emissions and distract them from the heavy methane emissions of dairy, cattle and hog ranches. None of these industries wanted the SEC looking at the part of their supply chain hiding 80 to 90 percent of their emissions.

I must also repeat for the tenth time that ESG was something these industries loved before the SEC threatened to make it real by including Scope 3 emissions. “The SEC coming and saying how much carbon emissions are you really responsible for, not just, you know, what you’re claiming you’re responsible for, is a really big deal to these companies,” Jesse Coleman, a researcher at Documented, who has spent the past few years tracking the anti-ESG push, told me last year. “If you’re an oil company, for example, the SEC asking how much carbon are you actually putting in the atmosphere from everything that you’ve gotten from underground? What is your real impact? That is a really big deal. It’s probably one of the biggest climate policy issues in play right now.”

After delaying its guidance for more than a year, the SEC ultimately bent to the will of extractive industries….