Public companies could be required to disclose their greenhouse gas emissions and other climate-related information under new rules proposed by the US Securities and Exchange Commission (SEC).
The rule changes—published online for a 60-day comment period—call on registrants to identify climate-related risks, their material impact on business, and relevant risk management processes. Firms would also need to divulge direct and indirect greenhouse gas (GHG) emissions, certain climate-related financial statement metrics and related disclosures, and details of any publicized targets, goals, or transition plans.
“Today, investors representing literally tens of trillions of dollars support climate-related disclosures because they recognize that climate risks can pose significant financial risks to companies,” SEC Chair Gary Gensler said in a statement. “And investors need reliable information about climate risks to make informed investment decisions.”
Not everyone is on board with the plan, though. SEC Commissioner Hester Peirce on Monday said in a lengthy response to Gensler’s even more lengthy proposal, suggesting it “will undermine the existing regulatory framework that for many decades has undergirded consistent, comparable, and reliable company disclosures.” Pierce believes the rules would harm “investors, the economy, and this agency,” and therefore can’t support it.
As Engadget points out, the SEC already allows for voluntary emissions guidance. If adopted, however, the new rule—which will phase in over several years—would make it mandatory.
“Companies and investors alike would benefit from the clear rules of the road proposed in this release,” according to Gensler. “I believe the SEC has a role to play when there’s this level of demand for consistent and comparable information that may affect financial performance. Today’s proposal thus is driven by the needs of investors and issuers.”
