Fredo Silva spoke to ESG Investor about the challenges ahead for the U.S. Securities and Exchange Commission's (SEC) proposed climate risk disclosure rule.
"There will be a variety of claims under constitutional and administrative law," said Fredo.
According to Fredo, although the SEC has adopted a flexible approach to Scope 3 emissions, requiring disclosures only where they are material, the compliance costs for smaller listed firms will be disproportionately high. Estimates for larger firms stand at $700,000 for the first year and $500,000 annually thereafter.
"That's not a huge delta from current compliance costs," Fredo said, adding that costs for smaller listed firms may not be that much less, even without Scope 3 reporting.
He added: "They will still have to do the extra accounting, rely on third parties for attestation, and bring in consultants to advise on how to generate and interpret the data they're going to be reporting."