Washington, D.C. — The U.S. Securities and Exchange Commission (SEC) is expected to release its final rule soon that would require companies to make standardized public disclosures about climate risks they face. A new Center for American Progress column outlines why investors urgently need standardized climate-related information about companies in order to make sound investment decisions and how the commission’s March 2022 proposal would take strides in fulfilling the SEC’s mission to protect investors. This column examines four types of disclosures that would be required if the March 2022 proposal were in place. Those include:
- Financial impacts of actual and potential physical and transition risks reasonably likely to have a material impact on the business or its financial statements.
- Expenditures the company makes to address those risks.
- Greenhouse gas emissions the company is responsible for, including emissions from its own fuel use (Scope 1), from the power plants that generate the electricity it uses (Scope 2), from the companies that make up its supply chain (upstream Scope 3), and from the use of its own products (downstream Scope 3).
- Whether—and if so, how—the company is integrating assessment and management of climate-related risk into its core business functions.
“The March 2022 climate disclosure proposal provides a clear road map for the SEC’s final rule,” said Alexandra Thornton, senior director of financial regulation and author of the column. “The SEC must step up and fulfill its mission by passing strong standardized climate disclosure standards, just as the European Union and the United Kingdom have already done. This is essential information that will help protect millions of Americans whose hard-earned savings are invested in U.S.-registered companies.”
Read the column: “What Will Be in the Final SEC Climate Disclosure Rule?” by Alexandra Thornton
For more information on this topic or to speak with an expert, please contact Sarah Nadeau at [email protected].