SEC to require climate-change risk disclosures under new plan
Companies would need to reveal detailed information about their greenhouse gas pollution under a new U.S. Securities and Exchange Commission plan, marking a major shift in how corporations would show they are dealing with climate change.
For the first time, the agency would require businesses to outline the risks a warming planet poses to their operations when they file registration statements, annual reports or other documents. Some large companies would have to provide information on emissions they don’t make themselves, but come from other firms in their supply chain.
The proposal, which the watchdog is considering Monday, sets up a major clash with industry lobbyists and Republican politicians who argue the regulations are outside the SEC’s jurisdiction. Liberal lawmakers, environmental advocates and the SEC, however, say mom-and-pop investors need the information to make informed decisions.
“Over the generations, the SEC has stepped in when there’s significant need for the disclosure of information relevant to investors’ decisions,” SEC Chair Gary Gensler said in a statement. “Today’s proposal would help issuers more efficiently and effectively disclose these risks.”The SEC would also require auditors or other experts to review the climate disclosures, which would be phased in over time.
Climate activists will likely cheer the agency’s decision to require larger companies to disclose some of their so-called Scope 3 emissions, which are generated by other firms in their supply chain or customers using their products. That information, which business groups say is very hard to quantify, wouldn’t be subject to an audit.
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