Apr 30, 2021 - Economy

SEC joins growing push for climate risk disclosure

Illustration of binoculars with a lightning storm reflected in the lenses

Illustration: Annelise Capossela/Axios

The Securities and Exchange Commission held meetings this month with powerful K Street and Wall Street players as regulators mull new rules on corporate disclosure of climate-related risks.

Why it matters: Disclosure could soon move beyond voluntary and private-sector-led efforts to become more deeply embedded in federal regulation.

Driving the news: Recently posted SEC records show a suite of meetings in response to the commission's March request for input.

  • The records show discussions with entities including the U.S. Chamber of Commerce, State Street Global Advisors, the Business Roundtable, the Edison Electric Institute, Walmart and others.

The big picture: Recent years have brought a growing push to provide investors and regulators more information about the ways climate change creates risks for many kinds of companies.

  • Think everything from how emissions policy and energy transition could affect fossil fuel producers, users and lenders to ways that climate change can affect physical assets and supply chains.

Catch up fast: The SEC initiative is part of a wider push among financial regulators and overseers.

Federal Reserve board member Lael Brainard recently made comments supportive of compulsory disclosure of financial institutions' risks.

What we're watching: Where various companies and lobbying groups come out on the topic as the SEC considers going beyond its 2010 "guidance" on the topic.

  • The SEC asked for input on a detailed set of questions, but written submissions are not due until mid-June (though some have arrived already).
  • In some, look for less of a yay-or-nay and instead input on how standards should be crafted.
  • "There is a broader base of support for mandatory disclosure than there has ever been before," Steven Rothstein of the sustainable investment advocacy group Ceres tells Axios.
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