A proposed clean-energy rule could shake up corporate America—and your portfolio

You need to understand what this proposed clean-energy directive might mean for your portfolio – even if you don’t care about sustainability A proposed revision to clean-energy accounting guidelines you likely didn’t know existed – from a nonprofit most investors probably never heard of – could have far-reaching implications for your portfolio.

Even if you don’t give a hoot about sustainability.

The draft update for how to track greenhouse gases from purchased electricity, called Scope 2 emissions, is from Greenhouse Gas Protocol, or GHG Protocol.

And so far, the proposed changes seem to be almost as unpopular as the Washington, DC-based nonprofit’s existing structure is pervasive.

Under the proposed update, companies would only be able to claim credit for clean energy produced during the same hour – and on the same grid – as the fossil fuel-generated electricity being equalized.

Currently, GHG Protocol only requires renewable energy to be sourced during the same year, and from a much wider geographic perimeter.

If adopted as written, the impact could be jarring.

Almost half of the Global Fortune 500 – including nearly four in five North American companies listed – are pursuing net-zero targets calibrated by the Protocol’s existing yardstick.

Without a legacy clause to grandfather existing long-term contracts, the added precision would invalidate more than 90 percent of today’s multibillion-dollar certification market – a move that would trigger a costly, multi-year reset for all but Google, Microsoft and the few utilities, service providers and financiers that already happen to be vested in the chosen methodology.

The accounting change could translate into dramatically lower sustainability scores for some companies.

The subpar rankings, in turn, could dramatically limit business prospects.

New lower scores, for example, could shut those companies out of doing business in markets with sustainability requirements based on the Protocol.

They might also limit opportunities with myriad other firms trying to boost their own scores by prioritizing suppliers and buyers with high sustainability marks.

Not surprisingly, the pushback has been overwhelmingly negative.