Reuters reports that the Securities Exchange Commission (SEC) intends to introduce climate risk reporting regulations by next Wednesday, March 16, according to two sources familiar with the SEC's plans. Reuters added that a spokesperson for the agency declined to comment.
Analysts say the new climate change action is a part of the SEC's 2022 goal to address more environmental, social, and governance (ESG) topics, alongside things like board diversity, human capital, and cybersecurity risk management. The climate change rules are expected to require corporations to disclose to investors how their business will impact the climate- and vice versa.
"Investors and asset managers can only make sound investing decisions when they have standardized and comparable information about companies' greenhouse gas emissions," Todd Phillips, director of corporate governance and financial regulation at the Center for American Progress, told Reuters.
Reuters writes that one of the sources said that the SEC is "committed" to introducing the rules by the end of the month, making the March 16 introduction less certain. The SEC's climate risk regulations were initially meant to be in place by the end of 2021, but Chair Gary Gensler pushed the date in October thanks to disagreements over the rules.
Regulators disagree regarding how comprehensive these disclosures need to be. Some argue that companies should disclose the greenhouse gas emissions of their suppliers and other partners, along with the company's own emission levels.
Companies have pushed back hard against the broader disclosure rule. Not having to report on the emissions of partners will not only save corporations money and effort, but also the potential risk of being sued for any mistakes.
Lawmakers stepped in last month to call on the SEC to make a decision on the issue. Democratic Senator Elizabeth Warren said the agency needs to take "quick action" to put these regulations in place.
"I urge you to act quickly and to release the strongest requirements possible to begin the formal rulemaking process," Warren wrote in a letter to the SEC Chair. "These delays are unwarranted and unacceptable, and violate the commitment, which you made seven months ago...the absence of a rule leaves shareholders and investors in the dark about the significant long- and short-term climate risks facing public companies."
Climate advocates are likely to welcome the SEC's announcement, but corporations continue to argue for the narrower version of the disclosure rule.