XBRL US on emissions reporting and climate risk
XBRL US has written to the Environmental Protection Agency (EPA) in response to a request for feedback on reporting of greenhouse gas emissions. The comment letter urges the EPA to collect this data in structured, machine-readable XBRL format “to ensure access to clean, consistent, timely and detailed data, and to track the progress of programs more effectively.” Crucially, XBRL US also suggests that the EPA should require the use of the Legal Entity Identifier (LEI) by facilities submitting greenhouse gas emissions data so that parent companies can be appropriately associated with their subsidiary facilities. “The absence of standardized identifiers associated with the parent company makes it difficult and time consuming to easily and unambiguously identify the parent company.” We concur that for such climate-related disclosures to have an impact on and be useful in corporate decision-making they need to be explicitly tied to corporate entities.
XBRL US has also responded to a Commodity Futures Trading Commission (CFTC) request for information on climate-related financial risk. Its letter discusses the importance of data standards for the CFTC in understanding and conducting oversight of climate-related financial risk, supporting these goals and encouraging the Commission to adopt XBRL for reporting. “Climate-related financial risks that affect market participants and commodities will inevitably affect the derivatives on which they are based. Buyers and sellers of derivatives should be protected from these risks just as those that may invest directly in the underlying asset.”