In US, SEC proposes corporate climate disclosures

Companies in the US would be required to disclose the greenhouse gas emissions they produce and how climate risk affects their business under new rules proposed on Monday by the Securities and Exchange Commission as part of a drive by the government to address climate change.

Under the proposals adopted on a 3-1 SEC vote, public companies would have to report on their climate risks, including the costs of moving away from fossil fuels, as well as risks related to the physical impact of storms, drought and higher temperatures caused by global warming. They would be required to lay out their transition plans for managing such risks, how they intend to meet climate goals, progress made, and the impact of severe weather events on their finances.

The number of investors seeking more information on risk related to global warming has grown dramatically in recent years, and many companies already provide climate-risk information voluntarily. The SEC believes by making required information uniform, investors would be able to compare companies within industries and sectors.

“Companies and investors alike would benefit from the clear rules of the road” in the proposal, SEC Chairman Gary Gensler said.

The SEC issued voluntary guidance in 2010, but this is the first time mandatory disclosure rules had been put forward. They could be modified before any final adoption following a period of public consultation.

Some major business interests and Republican officials have long opposed the idea of climate disclosures.

Hester Peirce, the sole Republican among the four SEC commissioners, voted against the proposal. “We cannot make such fundamental changes without harming” companies, investors and the SEC, she said. “The results won’t be reliable, let alone comparable.”

The US Chamber of Commerce and the American Petroleum Institute, the oil industry’s top trade group, maintain the SEC is reaching beyond its authority with mandatory reporting rules, which would impose substantial costs on businesses.

Tom Quaadman, an executive vice president at the Chamber, cited Supreme Court rulings that found any required disclosures under securities law must be of significant importance to investor decisions.

“We will advocate against provisions of this proposal that deviate from that standard or are unnecessarily broad,” he said in a prepared statement on Monday.

US President Joe Biden has made slowing climate change a top priority and has set a target to cut US greenhouse gas emissions by as much as 52 percent below 2005 levels by 2030. He has also said he expects to adopt a clean-energy standard that would make electric power carbon-free by 2035. He is committed to a wider goal of net-zero carbon emissions overall by 2050. (AP)