SEC considers climate disclosure rule

Securities regulators in the United States have moved closer to enacting a new rule requiring public companies, their operations in the climate and the formation of greenhouse gases to provide additional information to investors.

At Monday’s meeting, the Securities and Exchange Commission gave its initial approval to the much-anticipated climate disclosure rule. The move is at the heart of the commission’s chairman Gary Zensler’s agenda and a long-standing demand from climate advocates.

The proposed rule is an important step towards holding companies accountable for their role in climate change, and will give investors greater influence in forcing changes in business practices that have contributed to global warming.

The public will be given up to 60 days to comment on the project. Once enacted, it will set up the reporting framework required for companies to begin providing information on the climate-related impact of their businesses in their annual reports and stock registers.

This rule, which has been in effect for more than a year, has already provoked opposition from some business groups and may be challenged in court – which could delay the effective date.

Regulators have said the rule sets in This is a guideline issued in 2010 For companies publishing information on climate change. The SEC took that step at the same time as the Environmental Protection Agency began requesting some large companies to compile data on greenhouse gas emissions.

“From generation to generation, the SEC has stepped in when there is a significant need to release information related to investor decisions,” he said. Gensler said in a statement with the announcement of the new rule.

The US Chamber of Commerce, a business campaign group, said it widely supported the companies’ climate exposure goal but still wanted a “clear and viable” rule.

Tom Quadman, executive vice president of the Room for Capital Market Competitiveness, said the group was concerned that companies would be forced to release information that was inappropriate for investors. “We will argue against the terms of this proposal, which deviates from that standard or is unnecessarily broad,” he said. Quadman said.

Some companies, such as Apple, Facebook and Microsoft, report their greenhouse-gas data in detail, and they have set dates for which they want to have zero carbon emissions. Many companies have begun to publish some of their emissions.

Companies need to analyze their impact on climate in three stages – a Consistent analysis In a way that many in the scientific community consider the environmental impact of business activities.

In the first two stages, companies are required to publish annually the direct impact of their activities on climate change based on the products they manufacture and the indirect impacts on the environment caused by the use of electricity, trucks or other vehicles.

Phase III analysis is the most comprehensive and so-called carbon track of suppliers, including business travel and valuation of assets that a company leases. The SEC proposal would require only large companies to report this level of climate impact, and it would be up to the individual companies to decide. Disclosures will be “subject” to investors.

Determining whether information is material is a cornerstone of SEC regulation, and it often comes down to whether the disclosure causes the investor to buy or sell or hold a stake.

Already, investors – especially those with large mutual funds – are pushing companies to release more information about the impact of their business on the climate. “Investors with $ 130 trillion in assets under management are asking companies to disclose their climate risks,” he said. Jensler said in his statement. The SEC estimates that one-third of the 7,000 corporate annual reports reviewed in 2019 and 2020 revealed climate impact.

Many investors and corporate executives are likely to welcome the proposed rule because they believe that standardized climate exposures will make it easier for companies to compare environmental efforts. Wrote a letter in support of the Climate Change of the Microsoft Commission.

The big tech companies have shown themselves to be leaders in moving away from fossil fuels, but they are also facing the opposite. Microsoft aims to be “carbon negative” by 2030. Recent emission increase report.

Proponents of her case have been working to make the actual transcript of this statement available online.

But the drive for tougher disclosure requirements reflects more than just concerns for investors. Climate advocates believe that forcing companies to measure and advertise greenhouse gas emissions associated with their activities will encourage them to reduce those emissions even more drastically.

Christopher Flowwell And Peter Evis contributed to the reporting.