WASHINGTON–The Securities and Exchange Commission (SEC) has given initial approval to a much-debated proposal that would require public companies to report climate-related effects on their businesses.
The introduction of the proposal comes less than a week after NCUA watered down language related to climate change related to supervision of credit unions, with two of the board members stressing the agency will not be mandating any related actions by credit unions,
The SEC said that public companies must tell their shareholders and the federal government how they expect to be affected by climate change, a sweeping proposal that has long demanded by environmental advocates, noted the New York Times.
Goal to Provide ‘Clearer Picture’
The proposed rule — approved by a 3-to-1 vote — aims to give investors a “clearer picture of the risks that climate change might pose to companies, because of disasters like droughts and wildfires, changes in government environmental policies or consumers’ declining interest in products that contribute to global warming,” the Times stated. “But the consequences could be more far-reaching: Environmental and corporate-governance advocates said the transparency the rule requires would hold companies accountable for their role in climate change, and give investors more leverage in forcing changes to business practices that contribute to rising global temperatures.”
“It will make it possible for all interested stakeholders, including shareholders, to then push companies to take real action,” ad Bill Weihl, a former green energy czar at Google and director of sustainability at Facebook who now leads ClimateVoice, a group that encourages employees to press for climate actions, told the Times.
60 Days to Comment
The public now has up to 60 days to comment on the plan, which, if enacted, would set up a reporting framework for companies to provide information about climate-related risks in their annual reports and stock registration statements.
But the proposal has already provoked opposition from some business trade groups and may be challenged in court, which could delay its effective date. Much of the criticism has centered on to what extent emissions-related data falls under the SEC’s jurisdiction, the Times added, saying it requires the disclosure of information that is “material” to investors, meaning they need it to make an informed decision about buying or selling a stock.
Rep. Patrick T. McHenry (R-NC), the ranking Republican on the House Financial Services Committee, called the proposal “tone-deaf and misguided” and said the climate risks were not a material issue for most businesses.
Some companies — including Apple, Facebook, Google and Microsoft — already report extensive data and have set deadlines by which they hope to have zero carbon emissions overall. But the proposed rule, which runs more than 500 pages, would create a framework for all publicly traded companies, the report added.
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