The SEC mandates climate-related reporting to inform investors about climate change impacts on businesses. Companies will disclose physical and financial risks, greenhouse gas emissions (Scope 1, 2, and 3), in annual filings and registration statements. Similar reporting is already required in many countries and California. The SEC's rule faces potential legal and congressional challenges, especially regarding the disclosure of Scope 3 emissions.
ESG funds invest in companies prioritizing environmental, social, and governance factors while aiming for industry-leading performance. Despite tech giants' dominance in S&P 500 ETFs, they are also heavily invested in ESG funds due to the sector's perceived "cleanliness." ESG funds avoid excluding key sectors like energy, acknowledging their economic significance. Investor interest in ESG funds continues to rise, particularly among those seeking sustainable and long-term investments.
