The Securities and Exchange Commission is set to vote on a groundbreaking rule later this month that for the first time would require public companies to disclose the risks they face from climate change.
The agency posted notice this morning alerting the public that its five-member commission will meet on March 21 to consider proposed amendments that would “enhance and standardize” companies’ climate-related disclosures for investors.
It’s a major development. Investors and finance-focused environmentalists for years have called on regulators including the SEC to consider how climate change could affect the institutions they oversee. Mandated climate reporting, observers say, is perhaps the most obvious — and critical — first step in that process.
That’s the case because without standardized, reliable and consistent climate disclosure, investors, consumers and other regulators would continue to struggle to understand the extent of companies’ climate vulnerabilities, which include intensifying extreme weather events and the transition away from a fossil-based economy.
Sen. Elizabeth Warren (D-Mass.) last month called on the agency to release its proposed rule as quickly as possible for those very reasons.
“The lack of a rule means that shareholders and investors are left in the dark about the significant long- and short-term climate risks facing public companies, including supply chain disruptions, infrastructure risks, costs from storms, sea-level rise and weather-related crop or equipment failure, and economic or national security instability,” Warren wrote in a letter addressed to SEC Chair Gary Gensler.
