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Analysis-Corporate America looks for leeway on U.S. climate disclosures

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© Reuters. FILE PHOTO: People exit the headquarters of the U.S. Securities and Exchange Commission (SEC) in Washington, D.C., U.S., May 12, 2021. REUTERS/Andrew Kelly

By Katanga Johnson and Ross Kerber

WASHINGTON/BOSTON (Reuters) – Business associations for top U.S.-listed companies have pushed back against a landmark proposal by the Securities and Exchange Commission (SEC) to make corporate America disclose a range of greenhouse gas emission figures.

Groups including the U.S. Chamber of Commerce, the Bank Policy Institute, the National Association of Manufacturers (NAM) and the American Petroleum Institute (API) asked the Wall Street regulator for more discretion in the details they provide to investors, according to public correspondence sent to the agency.

The scale of the pushback highlights the pressure the SEC faces to dial back at least some of its climate agenda, though the extent to which companies may be successful in winning concessions remains to be seen. The regulator has also seen a show of suport in favor of the rules.

The letters, dated this month, came in response to a draft rule the SEC unveiled in March that would require public companies to spell out their own direct and indirect greenhouse gas emissions, known as “Scope 1” and “Scope 2 emissions.”

The measure would also require that companies disclose emissions generated by suppliers and customers, known as “Scope 3” emissions, if they are material or included in any emissions targets the company has set.

This aspect of the rule has attracted some of the strongest resistance, including from a top investor group.

The proposed rules “are vast and unprecedented in their scope, complexity, rigidity and prescriptive particularity,” wrote the Chamber of Commerce, the most powerful U.S. trade group. Among other things, it suggested Scope 3 reporting should be voluntary.

Comments on the proposal were due on Friday and will inform the SEC’s final rulemaking, which some analysts expect by the end of the year. Many companies now make ESG – environmental, social and governance – disclosures under voluntary standards, and with eyes on developments in the European Union, where officials aim to cut net planet-warming emissions by 55% by 2030 from 1990 levels.

U.S. President Joe Biden has said he wants to cut U.S. greenhouse gas emissions in half by 2030 and reach net-zero emissions by 2050.

SEC chair Gary Gensler has said the agency was responding to demands for consistent information from investors, who have poured some $7.5 billion into U.S. sustainable funds so far this year.

‘ILL-ADVISED MISADVENTURE’

The SEC’s rule could face legal challenges on the grounds that its benefits do not outweigh the significant reporting costs, or that it exceeds the SEC’s authority, according to a comment letter from George Mason University law professor J.W. Verret.

To be sure, the agency has received much support too, including from Democratic U.S. Senators and from the California Public Employees’ Retirement System, the largest U.S. pension fund. It praised aspects of the proposal, including its call for companies to provide details about potential emissions reduction targets.

Some of the most pointed criticism came from U.S. Republican politicians, echoing other critics of ESG investing who say that efforts to address environmental and other social issues are best left to elected leaders, not businesses.

West Virginia Attorney General Patrick Morrisey, along with 23 other state officials, for example, called the SEC’s proposed rule “an ill-advised misadventure into environmental regulation” that is legally indefensible, and should be suspended.

Republican senators also pushed back against the SEC’s proposal arguing that the measure would impose enormous costs on the U.S. economy.

LOOKING FOR TWEAKS

Top business groups did not go as far as calling for the rule to be scrapped, proposing instead changes to narrow its scope.

NAM suggested rescinding proposed Scope 3 reporting requirements and easing compliance with Scope 1 and Scope 2 reporting requirements.

Such changes “would significantly ease compliance burdens and reduce investor confusion while still preserving the spirit of the proposed rule,” it wrote.

While the API said it could not support the current proposal, it does support “timely and accurate reporting of GHG (greenhouse gas) emissions.”

Investors have broadly supported the push for new climate-disclosures as a way to clarify the current mix of company statements that can vary widely in detail and approach.

The Investment Company Institute (ICI), representing top U.S. asset managers, said it supported key parts of the SEC’s proposal including for Scope 1 and 2 disclosures, since measurements are now good enough to show investors “consistent and comparable information.”

But data gaps and methodology disagreements mean the SEC should back off its Scope 3 proposal, the ICI wrote.

“The SEC’s proposal should strike a better balance between ensuring investors get the information they need, without inundating them with inconsequential information,” ICI CEO Eric Pan told Reuters.

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Morgan Stanley will cover U.S. employees’ travel for abortion services -source

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© Reuters. The logo for Morgan Stanley is seen on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 3, 2021. REUTERS/Andrew Kelly

NEW YORK (Reuters) – Morgan Stanley (NYSE:MS) joined other large U.S. banks expanding its healthcare coverage to include travel costs for employees seeking abortion services if they are not locally available, according to a source familiar with the matter.

It is the latest financial company to expand healthcare policies to cover these costs following the Supreme Court’s decision Friday to overturn the 1973 Roe v. Wade precedent that had legalized abortion in the United States. [L1N2YB1AQ]

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Morgan Stanley Has Continued Conviction on Rockwell Automation’s Capex Cycle

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© Reuters. Morgan Stanley Has Continued Conviction On Rockwell Automation’s (ROK) Capex Cycle

By Sam Boughedda

Speaking about Rockwell Automation (NYSE:ROK) after a meeting with its management, Morgan Stanley analyst Joshua Pokrzywinski said in a note to clients that they came away with “continued conviction in a generational capex cycle” that they expect to remain resilient despite a slowing macro environment and choppy supply chain.

“We expect orders to remain healthy as other verticals, both consumer and other short-cycle industrial markets, contend with demand destruction from rising rates and persistent inflation,” wrote Pokrzywinski.

The analyst, who has an Overweight rating and trimmed his price target to $260 (from $277) on the stock, added that at the same time, the pace of improvement on supply chains, particularly for semiconductors appears to be “at best a game of inches for ROK.”

As a result, Morgan Stanley is “reducing FY22 estimates, particularly the seasonal ramp in F4Q22 due to supply constraints.”

“Given the magnitude of the sell-off and persistent strength over the next 2-3 years, we see ROK risk/reward as favorable acknowledging consensus is high for the next 2 quarters.”

Rockwell Automation closed Monday’s session just 0.12% higher.

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U.S. stocks lower at close of trade; Dow Jones Industrial Average down 0.20%

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© Reuters U.S. stocks lower at close of trade; Dow Jones Industrial Average down 0.20%

Investing.com – U.S. stocks were lower after the close on Monday, as losses in the Consumer Services, Technology and Basic Materials sectors led shares lower.

At the close in NYSE, the Dow Jones Industrial Average declined 0.20%, while the S&P 500 index declined 0.30%, and the NASDAQ Composite index lost 0.72%.

The best performers of the session on the Dow Jones Industrial Average were UnitedHealth Group Incorporated (NYSE:UNH), which rose 2.02% or 10.02 points to trade at 505.66 at the close. Meanwhile, Chevron Corp (NYSE:CVX) added 1.93% or 2.80 points to end at 147.57 and Merck & Company Inc (NYSE:MRK) was up 1.37% or 1.28 points to 94.41 in late trade.

The worst performers of the session were Salesforce.com Inc (NYSE:CRM), which fell 2.48% or 4.61 points to trade at 181.31 at the close. Nike Inc (NYSE:NKE) declined 2.13% or 2.41 points to end at 110.50 and Boeing Co (NYSE:BA) was down 1.99% or 2.81 points to 138.72.

The top performers on the S&P 500 were Valero Energy Corporation (NYSE:VLO) which rose 8.00% to 112.24, Devon Energy Corporation (NYSE:DVN) which was up 7.48% to settle at 57.79 and Hess Corporation (NYSE:HES) which gained 5.18% to close at 106.96.

The worst performers were Etsy Inc (NASDAQ:ETSY) which was down 3.55% to 80.65 in late trade, Electronic Arts Inc (NASDAQ:EA) which lost 3.53% to settle at 125.60 and Autodesk Inc (NASDAQ:ADSK) which was down 3.43% to 185.87 at the close.

The top performers on the NASDAQ Composite were Evofem Biosciences Inc (NASDAQ:EVFM) which rose 187.71% to 1.07, Acutus Medical Inc (NASDAQ:AFIB) which was up 87.59% to settle at 1.01 and Epizyme Inc (NASDAQ:EPZM) which gained 55.14% to close at 1.48.

The worst performers were Powerbridge Technologies Co Ltd (NASDAQ:PBTS) which was down 34.95% to 0.67 in late trade, Borqs Technologies Inc (NASDAQ:BRQS) which lost 24.38% to settle at 2.15 and Enochian Biosciences Inc (NASDAQ:ENOB) which was down 21.92% to 2.60 at the close.

Rising stocks outnumbered declining ones on the New York Stock Exchange by 1738 to 1413 and 116 ended unchanged; on the Nasdaq Stock Exchange, 1948 rose and 1867 declined, while 175 ended unchanged.

Shares in Borqs Technologies Inc (NASDAQ:BRQS) fell to 52-week lows; down 24.38% or 0.69 to 2.15. Shares in Enochian Biosciences Inc (NASDAQ:ENOB) fell to 52-week lows; losing 21.92% or 0.73 to 2.60.

The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 1.03% to 26.95.

Gold Futures for August delivery was down 0.38% or 6.95 to $1,823.35 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in August rose 1.92% or 2.07 to hit $109.69 a barrel, while the September Brent oil contract rose 1.80% or 1.96 to trade at $111.06 a barrel.

EUR/USD was unchanged 0.27% to 1.06, while USD/JPY rose 0.22% to 135.46.

The US Dollar Index Futures was down 0.26% at 103.69.

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