What climate pledges miss: the case for long-term policies

Gary Goldsholle

Coming out of COP26, there have been a number of commitments made by leading companies about reducing carbon emissions and operating sustainably. Critics point out that the commitments made at the event are both hard to track and enforce.

While the SEC is reportedly working on a rule proposal to require various climate-based disclosures from public companies, there is no reason for companies to wait to bring an appropriate level of visibility and accountability to such commitments.

While these climate pledges may signal a moment in the company’s trajectory towards a more sustainable future, they would yield more power if they were built into a long-term stakeholder policy that the company was required to annually update. Thus, such pledges could become more than a brief moment of publicity that risks being ignored or forgotten.

The Long-Term Stock Exchange was built, in part, to address this very issue. Among the Long-Term Stock Exchange’s listing standards, which were approved by the SEC in 2019, is a requirement for a long-term stakeholder policy, which includes “the Company’s impact on the environment and its community.”

Companies listed on the Long-Term Stock Exchange must also disclose in their annual proxy statement the existence of their long-term policies and the website where they are publicly available free of charge. The Long-Term Stock Exchange requires each listed company to review such policies annually, ensuring that they do not become stale or inaccurate. And because these are part of the Long-Term Stock Exchange's listings requirements, companies must maintain these policies, or they would fall out of compliance with listing standards and be subject to delisting.

One question that comes up often at events like COP26 is if any standards exist that could be broadly used across industries and geographies. This has led to endless debates that have diverted companies from making meaningful progress in the ecosystems they operate in. Our long-term policies are intentionally principles-based, meaning that they can be applied across a full range of industries, and companies can tailor their policies to meet their particular commitments.

For companies that want to put some mettle behind their pledges, the Long-Term Stock Exchange is ready to be your partner. If you're interested in learning more about listing, read more about the Long-Term Stock Exchange's listing standards or contact the LTSE Listings Team.

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