New rules proposed on Monday by the Securities and Exchange Commission (SEC) would require companies to disclose how much greenhouse gas emissions they produce and how climate risk affects their businesses.
The new rules are part of a drive across government to address climate change and global warming.
The proposals were adopted on a 3-1 SEC vote. Under them, public companies would have to report on climate risks, including how much it would cost to move away from fossil fuels. It would also include detailing risks related to the physical impacts of storms, droughts, and higher temperatures caused by climate change and global warming.
Companies would have to detail transition plans for managing climate risk, how they would intend to meet climate goals, progress made on those goals, and the impact of severe weather on company finances.
Investors want more information on risks related to climate change, a demand that has grown a lot over the past several years.
SEC Chairman Gary Gensler said that companies and investors would benefit from clear rules. With uniform information being required from companies, investors will be able to compare companies to each other.
Investor groups have rallied behind the rules as well, saying that investors can only assess risks if they know that they exist. Potential liabilities caused by climate change need to be addressed and taken seriously, they have said.
Chair of the House Select Committee on the Climate Crisis, Rep. Kathy Castor, said that climate risks and harm from climate change have grown, and have threatened the economy.
This marks the first time that the SEC has put forward mandatory disclosure rules. In 2010, the SEC issued voluntary guidance.
The rules are now open to a public comment period that will last for about 60 days, and then they can be modified before being completely and finally adopted.
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