The Securities and Exchange Commission has issued rules to make companies whose shares are publicly traded in the United States account for their climate pollution and explain how they're dealing with threats from global warming.
The climate rules the SEC adopted Wednesday were the target of intense lobbying since they were proposed in 2022, with interest groups arguing over how much information companies should have to disclose. The rules don't go as far as environmentalists had wanted. But the U.S. Chamber of Commerce and other business groups sued to block similar regulations that California passed in 2023, and legal experts say it is likely the SEC rules will also be challenged in court.
Wall Street's top regulator has said climate change can pose serious financial risks to companies. And because many corporations already report some climate information voluntarily, the SEC says it has a responsibility to ensure the data that businesses provide is consistent and comparable.
"Our federal securities laws lay out a basic bargain: Investors get to decide which risks they want to take so long as companies raising money from the public make what President Franklin Roosevelt called 'complete and truthful disclosure,'" Gary Gensler, chair of the SEC, said on Wednesday. Gensler added that the SEC has "an important role overseeing the disclosures at the core of that basic bargain."
Does reporting climate risks help cut corporate greenhouse gas pollution?
While the new SEC rules will arm investors with more information about climate risks, it is unclear what impact, if any, the regulations will have on global warming.
A study published in 2023 found that requiring companies to disclose their greenhouse gas emissions could lead customers, employees and other stakeholders to pressure firms to cut their climate pollution. While many corporations have recently issued reports on climate change and set targets to slash emissions, independent researchers say few have delivered credible plans to meet their goals.
Gensler said the new SEC rules will require companies to start disclosing how they plan to achieve goals they set related to climate change.
"Whether climate disclosure at a global level will ever have the greenhouse gas emissions reduction effect we need, and whether it will have that effect fast enough, I think is still an open question," says Cynthia Williams, a law professor at Indiana University Maurer School of Law. "But what this disclosure regime can do is cause companies to take climate governance more seriously."
Gensler has said repeatedly that the agency's new disclosure rules aren't climate regulations — they're requirements for financial reporting.
Click here to read more wyso.org
Photo Credit: gettyimages-tlillico
Categories: New York, Business, Weather