Vice President Kamala Harris looks at a high wall during the climate change discussion at the National Aeronautics and Space Administration (NASA) Goddard Flight Space Center in Greenbelt, Md., on November 5, 2021. SEC announced new proposals on Monday requiring companies to disclose climate-related risks.
Olivier Douliery / AFP via Getty Images
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Olivier Douliery / AFP via Getty Images
Vice President Kamala Harris looks at a high wall during the climate change discussion at the National Aeronautics and Space Administration (NASA) Goddard Flight Space Center in Greenbelt, Md., on November 5, 2021. SEC announced new proposals on Monday requiring companies to disclose climate-related risks.
Olivier Douliery / AFP via Getty Images
Every year, public companies in the US are required to provide investors and regulators with detailed data about their financial performance and the risks they face. Soon, they may also have to disclose information about how they are dealing with climate change.
The U.S. Securities and Exchange Commission on Monday formally proposed new rules that would require businesses to report greenhouse gas emissions for the first time, along with details about the impacts of climate change. climate change for their business.
While some companies like Apple have voluntarily reported climate-related information, to date there have not been any standard requirements imposed by the SEC.
In a statement supporting the proposed rules, SEC Chairman Gary Gensler said the regulator was responding to demand from investors and companies as it increased its push for information on related risks. related to the effects of climate change on businesses.
“Our core bargaining since the 1930s has been that investors can decide what risks to take, as long as public companies provide complete and fair information and truthfulness in these circumstances,” says Gensler. that disclosure,” Gensler said. “That principle applies equally to our environmental disclosures.”
Gary Gensler, Chairman of the US Securities and Exchange Commission, testifies before the Senate Banking Committee on September 14, 2021, in Washington, DC
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Evelyn Hockstein / Pool / Getty Images
Gary Gensler, Chairman of the US Securities and Exchange Commission, testifies before the Senate Banking Committee on September 14, 2021, in Washington, DC
Evelyn Hockstein / Pool / Getty Images
The rules will be divided into phases
If regulators approve the rules, companies will be required to provide climate-related information when they register as public with the SEC and also in annual filings.
Companies will need to disclose potential risks to their operations from climate-related events such as operating in an area exposed to the risk of sea level rise.
The rules would also require companies to provide data on their own greenhouse gas emissions and also on the amount of energy they consume. These are called “Scope 1” and “Scope 2” emissions, respectively.
“Scope 3” emissions have proven to be more controversial. They are emissions generated by the company’s suppliers and customers. Many companies and trade groups, including the American Chamber of Commerce, have opposed mandatory Scope 3 reporting and say that estimating emissions from a company’s operations would be too heavy and complicated.
Under the rules announced on Monday, the SEC said it will push companies to determine if their Scope 3 emissions are “physical” – meaning data will be a factor. Important factors to know for an investor.
Investors and the SEC itself will be able to challenge the company’s assessment of what is considered material information. Smaller companies will be exempt from reporting their Scope 3 emissions.
The rules will be phased in, with an additional period for Scope 3 disclosures. That means companies may not have to file climate risk information until at least until the earliest. year 2024.
The public will have 60 days to consider the proposed rules.
