The U.S. Securities and Exchange Commission is Pushing for Climate Disclosure Regulations from More Companies
As of November, the U.S. Securities and Exchange Commission (SEC) is thinking about placing a requirement for publicly traded companies in the US registered with the SEC to create a climate disclosure program. This program will require companies to disclose the potential climate related risks and greenhouse gas emissions that the company may face. They also want companies to disclose how much carbon they are releasing in the atmosphere and how it is affecting the climate. These new requirements would require companies to report things such as physical hazards or transition risks.
Courtesy of Los Angeles Times
These requirements are an effort from the SEC to urge huge greenhouse emitting companies to improve climate control, strengthen current climate disclosures and prepare a financial system for companies to fall back on for financial losses from climate changes. This is a part of the recent effort from the government to create a more sustainably sound country like in the EU. However, this plan is easier said than done. These requirements have received recent push back from republican lawmakers who are considering suing the SEC over these guidelines because they think that the SEC doesn’t have the jurisdiction. Some companies also oppose the new requirements and see them as an extra burden for them. Danielle Fugere, president of shareholder advocacy group As You Sow stated, “Politics should be separate from markets. The world is transitioning towards a greener economy, and markets are adjusting to that,” she said. “It is absurd for lawmakers to think that they’re going to put a stop to that progress. It would be detrimental to U.S. businesses.” The proposal has gained more than 14,000 comments so it is hard to tell whether or not companies and the public will support these requirements moving forward.
Courtesy of Stella McCartney
The real concern is whether or not these requirements will actually hold companies truly accountable and responsible for how much carbon they release daily or if companies will try to greenwash or send out misinformation about their companies carbon emissions. In order to combat this, the SEC has to create their program to be greenwashing resistant. Companies have to be given clear guidelines about low carbon initiatives. They need to be given emission targets for the year (or even for each month). They should also require them to report specific yearly sustainable goals or changes that they want to make. The SEC should lay out what fossil fuels they are using and how companies should phase out their fossil fuels. Companies should also consider their investors and financial markets so they can think about the future of their investments. Climate change can be a big economic change for companies and investors need to be involved in these requirements and considerations.
Courtesy of CFDA
If passed, these requirements may be a big challenge for companies that were not previously disclosing. However, this could be a great thing for climate change and accountability, but with politician pushback, it is hard to tell whether or not these requirements will be put in place. The government rarely holds companies accountable especially when it comes to sustainability but a change should be in order. It is time for the US to become a more sustainability sound country and for both the government and consumers to hold companies accountable for what they do to the planet everyday.
