SEC proposes rules to companies in the US due to climate change

WASHINGTON (AP) — Companies will have to disclose the amount of polluting emissions they produce and how global warming affects their businesses under new rules proposed Monday by the US Securities and Exchange Commission (SEC) as part of a government-wide push to address climate change.

Under the proposals adopted in a 3-to-1 SEC vote, public companies will have to report their climate risks, including the cost of stopping using fossil fuels, as well as the risks associated with the physical impact of storms, droughts and higher temperatures due to global warming. They will need to outline their transition plans to deal with climate risk, how they intend to achieve climate goals and the progress made, and the impact that severe weather events have on their finances.

The number of investors seeking more information on climate change risk has increased dramatically in recent years. Many companies already volunteer climate risk information. The idea is that, with uniform information required, investors can compare companies within industries and sectors.

“Companies and investors alike would benefit from the clear rules of the game” in the proposal, SEC President Gary Gensler said.

The required reports would include greenhouse gas emissions produced directly or indirectly by companies, such as from the consumption of company products, vehicles used to transport products, employees' business trips and energy used to produce raw materials.

The SEC issued voluntary guidelines in 2010, but it is the first time that mandatory reporting rules have been introduced. The rules were open to a public comment period for approximately 60 days and may be modified prior to a final adoption.