Regulatory policy

GSB panel discusses policy barriers to private sector climate action

A proposed greenhouse gas emissions disclosure rule dominated discussions at a panel of sustainability policymakers held at the Graduate School of Business (GSB) on Wednesday. Panelists speculated on obstacles and opportunities for net-zero targets for corporations and start-ups at the fourth annual Climate, Business and Innovation Conference, hosted by the GSB Energy Club in the United States. CEMEX Auditorium.

The conference, which showcased Stanford’s emerging climate technology start-ups and interventions, also touched on regulatory and policy frameworks to accommodate and incentivize private sector companies to achieve net zero emissions commitments.

Speakers said the proposed emissions disclosure rule, which tightens disclosure requirements for public companies, is a necessary step to developing truly environmentally effective solutions for the private sector.

The Securities and Exchange Commission (SEC) rule would require companies to disclose three types of issuances. The first category, called Scope 1, includes greenhouse gas emissions that the company produces directly, such as the combustion of fuels. The second type, Scope 2, includes emissions associated with the sources of electricity or energy that the company consumes. Scope 3 encompasses all associated emissions along a company’s value chain, including emissions from suppliers to market.

Susan Mac Cormac, attorney and co-chair of the Energy and Cleantech group at law firm Morrison & Foerster, said pressuring companies to disclose more information will create a ripple effect that could impact Stanford contractors, among others.

“If you’re a Stanford startup trying to work with big companies, you’ll need to start tracking your emissions data as companies change their accounts to report their emissions,” Mac Cormac said.

Indeed, the rule would require large public companies to report their emissions and, as part of this tracking, companies will have to aggregate emissions from their supply chains. This has the potential to transform the way greenhouse gas emissions are tracked, allowing for better regulation and reduction, according to Mac Cormac.

Danny Cullenward, policy director of a nonprofit research organization called CarbonPlan, which focuses on transparency and scientific integrity in climate solutions, said the increased transparency through the SEC’s proposed rule would generate more information for researchers, policy makers and members of the private sector to use in their decision-making.

Mac Cormac also mentioned Article 9 of the European Union’s Sustainable Financial Disclosure Regulation (SFDR) as representing the potential next step in sustainable finance. The article provides an engagement framework for companies to opt in and monitor their investments to ensure that any products and services they invest in do not “materially harm” the investment objective. sustainable,” said Mac Cormac. For example, sustainable companies should not invest in the products of a cloud computing company if that money will be used to find new sources of fossil fuels. In Mac Cormac’s view, policies like Section 9 are important “so that we don’t end up with another Facebook in a democracy.”

Cullenward said he believes increased standards and regulations will benefit private companies.

“If you try to do better, [standards] help you stand out,” Cullenward said.

Nike Chief Sustainability Officer Noel Kinder, who spoke at the event’s corporate pledges panel, echoed Cullenward’s view. He said he believed the SEC’s disclosure rule would give brands an opportunity to show off their efforts to decarbonize their supply chains, especially large companies that have invested significant effort in tracking their emissions. . The rest of the panel agreed, however, that there are concerns that small and medium-sized businesses are not yet aware of the urgency and impact of emissions disclosure.

While the SEC’s proposed rule would provide a transparent environment conducive to meaningful supply chain transitions, former US Deputy Chief Technology Officer and Speed ​​& Scale co-author Ryan Panchadsaram said that the way emissions are accounted for today can be misleading.

“The Scope 3 emissions guideline is crap…it’s too amorphous,” Panchadsaram said.

Because Scope 3 emissions include many categories, from business travel to downstream emissions, the wide range of sources can compromise the integrity of greenhouse gas emissions data. Despite criticism and hopes that the SEC’s disclosure rule will pass, Cullenward said he’s not optimistic because he sees the current state of democracy as unlikely to push for more policy changes. politics because of the “reactionary Supreme Court”.

During the keynote speeches, MAP Energy founder and Stanford adjunct professor of civil and environmental engineering, Jane Woodward, discussed her early-stage shift to climate business after a long career in oil and gas investments. Woodward said climate solutions exist as part of the collaborative effort across technology, policy and finance frameworks, bolstered by a better understanding of consumer behavior to grow demand for more sustainable alternatives. This collaborative framework between the private and public sectors remained a theme throughout the conference.

While Woodward said she recognizes that innovations should aim for gigatonne-scale reductions in greenhouse gases in an ever-shorter time frame before irreversible climate damage, she acknowledged that not all solutions would not reach this scale. Instead, Woodward said megaton-scale innovations acquired by other companies are also a meaningful and more viable solution. Woodward added that we are living in the “renaissance of single-use assets”, where properties such as oil wells, which once served only to extract resources from the earth, are being reconsidered as underground storage sites for greenhouse gases or alternatively like gravity. sink, a form of long-term energy storage.

Political practicality was another main point of discussion. Panchadsaram called for policies recognizing the green premium – the added cost of choosing to use more environmentally friendly products – and subsidizing them accordingly to make these products a competitive alternative to their fossil fuel-based counterparts. Conceptually, that’s like imposing a carbon tax, but that route is more feasible because it doesn’t require regulation that can be difficult to pass, he said.

At the individual level, Panchadsaram added, everyone has a role to play in making climate the top election issue to create political incentives for elected officials to prioritize climate.