SEC Proposes New Climate Disclosures

🏛️ The SEC (the agency, not the collegiate conference) unveiled a landmark proposal yesterday that would require companies listed on US exchanges to disclose their climate-related risks and greenhouse gas emissions.

• The proposed law would compel businesses to obtain independent certification of their climate estimates.
• As written, most companies in the S&P 500 would have to report the greenhouse gas output of both their supply chain and consumers.
• While hundreds of firms have already begun to report such information, SEC officials say the current system is inconsistent and makes it hard for investors to compare across different companies.

✋ Yes, but… The proposal is all-but-certain to face legal challenges from Republicans and some industry groups, which argue the new rules go far beyond the SEC’s mandate to protect investors by requiring that companies disclose financially-relevant information.

• Some businesses fear the new rules could leave well-meaning firms potentially liable to lawsuits, given how difficult it is to accurately measure emissions and climate change risks.

👀 Looking ahead… The SEC’s draft proposal will now be open to public comment for at least two months before the agency starts working to finalize a rule.

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