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SEC Climate Change Rules Overview:
- Where: If adopted, the new rules would affect public companies nationwide.
- Who: The U.S. Securities and Exchange Commission (SEC) released a set of new proposed rules that would require public companies to make disclosures about their climate impacts and risks.
- Why: The SEC aims to implement more uniform rules and regulations regarding climate impact so consumers can be better informed about companies across all sectors.
The U.S. Securities and Exchange Commission (SEC) released a set of new proposed rules that would require public companies to disclose their greenhouse gas emissions and how climate change affects their businesses. The goal is to uniformly collect information across industries so that consumers can more easily compare companies when choosing to invest.
Specifically, companies would have to disclose the greenhouse gas emissions they produce directly and indirectly. This would include emissions from vehicles used to transport products or personnel, consumption of products and energy to grow raw materials.
Companies would also have to report on their climate-related risks, such as the costs of divesting from fossil fuels and the costs of storms, drought and drastic temperature changes caused by climate change. Additionally, companies would create and submit their plans for and progress toward meeting climate goals and transition plans for managing climate risks.
“Companies and investors alike would benefit from the clear rules of the road,” said SEC Chairman Gary Gensler. The proposed rules are not final and may be modified after a period of open public comment.
The SEC proposal is the latest in a governmentwide effort to tackle the climate crisis. The agency previously issued climate guidance in 2010, but compliance was voluntary.
SEC Climate Change Rules Trigger Negative Republican, Oil Biz Response
The SEC proposals were passed in a 3-1 vote among SEC commissioners with the only Republican, Hester Peirce, voting no.
“We cannot make such fundamental changes to our disclosure regime without harming investors, the economy and this agency,” she wrote, arguing that the proposal prioritizes how regulators, rather than investors, “expect them to run their companies.
Even before this latest proposal, the SEC has faced Republican opposition to climate change rules and regulations. Last June, 16 Republican state attorneys general wrote a letter to SEC Chairman Gensler arguing that companies can make their own decisions on “whether and how to satisfy the market’s evolving demands” and that any action from the SEC would be “ill-suited.
The American Petroleum Institute, through Frank Macchiarola, its senior vice president of policy, economics and regulatory affairs, said that it does not think that such climate disclosures, as would be required by the SEC, are significant for investors’ decisions.
As an investor, would you be interested in knowing more about companies’ climate impacts before making an investment? Share your thoughts on the SEC climate change rules in the comments section below!
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