Posted on Wednesday, April 21, 2021

On April 21, 2021, U.S. Treasury published remarks given by Secretary of the Treasury Janet Yellen to the Institute of International Finance regarding climate-related issues. In her speech, Secretary Yellen lays out Treasury’s “whole-of-government” approach to climate change, and points out the importance of ESG disclosures as follows:

“This brings me to our initiatives to mobilize the private sector. After all, the investment needed to green our economy is enormous. The Jobs Plan provides critical funds via direct investments and tax credits—but meeting the total cost over the next ten years will require substantially more. One estimate placed the needed incremental investments at over $2.5 trillion for the United States alone. Private capital will need to fill most of that gap.

In theory, it should not be very challenging to mobilize capital. Investor demand for climate-aligned investments, including green bonds and sustainable assets, is rapidly increasing. A key challenge though, as you know, is that the current financial reporting system is not producing the reliable, consistent, and comparable disclosures needed for investors to accurately compare climate-related risks and opportunities across companies.

Reliability of climate-related disclosures is the threshold issue. Investors fundamentally need accessible and credible information to be able to properly assess the risks and opportunities. We also need consistency of reporting frameworks across sectors, as well as comparability across jurisdictions. Different reporting frameworks reduce the effectiveness of data, making it challenging or impossible for investors to make informed decisions…. the SEC is currently reviewing its 2010 guidance on climate-related disclosures. Treasury will work with the SEC as part of its participation in international discussions to promote effective and consistent approaches to disclosure. We are closely following progress of and support the International Financial Reporting Standards Foundation establishing a Sustainability Standards Board that will focus first on developing a climate disclosure standard.”

Read the full remarks.