SEC adopts climate rule with Democratic support, Republican dissent - Business Insurance
SEC adopts climate rule with Democratic support, Republican dissent | Business Insurance
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(Reuters) — Wall Street’s top regulatory body voted on Wednesday to adopt a rule that would force public companies to disclose certain climate-related risks, first-of-its-kind regulation that was watered down after two years of debate over an early draft.
The Security and Exchange Commission rule aims to set a standard for how companies communicate with investors about greenhouse gas emissions, weather-related risks, and how they are preparing for the transition to a low-carbon economy.
All three Democratic members of the SEC supported the rule including Chair Gary Gensler, whose legacy will be partly defined by this effort to formalize a system that previously allowed companies to volunteer much of the information in a way of their choosing.
Both Republican commissioners voted against the rule, and companies that oppose it are widely expected to challenge it in court.
In its final version, the rule drops a proposal to ask larger companies to gather and report data on planet-warming emissions from suppliers and end-users of their products, known as Scope 3 emissions, in some circumstances. Reuters first reported this change last month.
In a further move away from the more prescriptive draft, it also allows those larger companies to determine whether emissions from their own operations and the power they purchase constitute information that investors need to make decisions.
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”