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The SEC is set to publish historic climate disclosure rules: NPR


On August 9, 2021, waves crash near a condo in Sunny Isles, Florida. Rising sea levels are considered one of the potential impacts of climate change and can affect areas such as Miami-Dade County, Florida.

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On August 9, 2021, waves crash near a condo in Sunny Isles, Florida. Rising sea levels are considered one of the potential impacts of climate change and can affect areas such as Miami-Dade County, Florida.

Joe Raidle / Getty Images

How much do companies contribute to climate change and how are they affected by climate change? These questions are at the heart of the key announcements expected by the Securities and Exchange Commission on Monday.

The country’s highest financial regulators are expected to propose new disclosure rules that require companies to report on their contribution to greenhouse gas emissions and how climate change affects their business. increase.

Recognizing climate change as a risk to the economy and financial system is part of the global push by regulators.

Investors require companies to disclose the potential risks of climate change, but some companies are concerned that climate-related government orders can be invasive and burdensome. doing.

Here’s what you need to know before the SEC’s announcement:

So what are the goals of the SEC?

While some companies, including Apple, have already disclosed their greenhouse gas emissions and emissions from suppliers, in the United States, companies accurately report to investors about climate impacts and risks. It lacks a clear standard of what must be done. The SEC wants a change. That.


SEC Chair Gary Gensler testifies before the Senate Banking Commission on September 14, 2021 in Washington, DC.

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SEC Chair Gary Gensler testifies before the Senate Banking Commission on September 14, 2021 in Washington, DC.

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All rules proposed by the four members of the SEC, led by Chair Gary Gensler, are subject to the public feedback period.

Rachel Goldman, a partner at law firm Bracewell, said:

Why does climate adopt enhanced disclosure rules?

The impetus comes primarily from the investors themselves, who are becoming more and more enthusiastic about how climate change affects the businesses they fund.

The White House also wants to address climate-related financial risks. Last year, President Biden issued a presidential directive to work with the federal government to help identify the risks posed by climate change.

Regulators have been considering this issue for years, but efforts have accelerated under former SEC Deputy Chairman Allison Helen Lee and continue under Gensler.

“Investors have raised their hands on climate risk disclosure and are asking regulators to do more,” Gensler told last year’s forum on green investment.

“Today, investors want to better understand the climate risks of companies that own or may buy back their shares,” he added.

Do companies support enhanced climate disclosure?

Most companies are aware of the effects of climate change, and many have already promised to move towards net zero emissions.

However, some companies are afraid that SEC obligations can be a headache, and are liable for proceedings given how difficult it is to measure emissions and climate change risk. You may bear it.


The iPhone will be on display when people attend the grand opening event of the new Apple Store in Los Angeles on November 19, 2021.

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The iPhone will be on display when people attend the grand opening event of the new Apple Store in Los Angeles on November 19, 2021.

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Anne Finucane, who oversaw Bank of America’s environmental, social and governance (ESG) work as vice chairman of the bank, upheld the strengthened climate rules and reports on climate risks are demanding and can be duplicated. It states that it has sex.

“Currently, there are at least 12 third-party, NGOs that measure companies, not just financial institutions, but all companies,” she said in an interview with NPR before retiring in December. Same, but 20 percent different. “

Many Republicans oppose financial regulators stepping into climate change.

Sarah Bloom Raskin, who was nominated for the highest regulatory position on President Biden’s Federal Reserve Board this month, has vehemently opposed her position that banking regulators should pay more attention to climate-related risks. After that, I was forced to withdraw.

So do SEC rules cause a big battle?

It is still unclear how widespread the SEC’s disclosure rules are and whether they will affect all listed companies.

However, companies in particular are concerned that the SEC may require companies to disclose so-called “Scope 3” emissions. These are the emissions generated by the supplier and customer of the company (Scope 1 is the emissions generated by the company itself, Scope 2 is the emissions from the energy consumed, for example electricity).

The SEC’s move to require Scope 3 disclosure can cause significant corporate backlash, as well as disclosure rules that companies find too broad or too comprehensive.

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