US regulator SEC wants companies to disclose climate impact

The US Securities and Exchange Commission (SEC) on Wednesday adopted new rules that prescribes disclosure norms for companies regarding climate impact and greenhouse emissions resulting from their operations.

SEC said the new rules aim at an enhanced, uniform compliance with emission and climate related disclosures and are intended to cater to investors’ demand for consistent, comparable, and reliable information about the financial effects of climate-related risks    .

Under the new rules, public companies will have to disclose their greenhouse gas emissions, risks to environment and the strategies adopted to manage such risks. These compliance rules are applicable to companies for a period starting from 2025 to 2033, with varying norms depending on the size and origin of the company.

These relate to actual and potential material impacts of any identified climate-related risks on the company’s strategy, business model, and outlook, the strategy adopted to mitigate or adapt to such risks and the expenditures incurred and material and financial implications of such mitigation or adaptation activities.

The disclosure on climate risks have to be made in a company’s SEC filings, including annual reports and registration statements rather than on company websites, which will make them more reliable.

This, according to SEC will empower investors with the necessary bargaining tool that empower them to decide which risks they want to take while investing their money in companies raising money from the public.

SEC chairman Gary Gensler said the new rules are part of SEC’s continuing efforts to update disclosure norms for companies, especially those related to emissions and climate action.

Companies have so far been disclosing information regarding the impact of their operation on climate on a voluntary basis and there was no standardized format for presenting climate impact data.