WASHINGTON (July 10, 2019)—Today, the House and Senate introduced companion legislation requiring businesses to disclose climate-related risk in their annual Securities and Exchange Commission (SEC) reporting, and calling for specialized metrics for the finance, insurance, transportation, electric power and fossil fuel industries. Representatives Cartwright, Casten and Ocasio-Cortez introduced the House bill while Senators Bennet, Blumenthal, Booker, Carper, Feinstein, Gillibrand, Harris, Markey, Merkley, Klobuchar, Schatz, Schumer, Smith, Van Hollen, Warren and Whitehouse introduced the Senate version. The legislation requires companies to identify risks—and how they plan to address them—that develop as the global economy transitions to low carbon emissions, including the potential for stranded assets, as well as physical risks that sea-level rise and extreme weather events would pose to companies’ supply chains, operations and property.
“No smart business or investor would make decisions about their day-to-day or long-term actions without systematically researching, documenting and mitigating the risks they face,” said Kathy Mulvey, fossil fuel accountability campaign director at the Union of Concerned Scientists (UCS). Mainstream investors are now demanding improved disclosures related to climate change, one of the biggest risks affecting the global economy and individual corporations—particularly fossil fuel giants like ExxonMobil.”
The bills task the SEC with developing the standards that would allow systematic evaluation of these risks as the world strives to limit global warming to 1.5 degrees Celsius above pre-industrial levels to avoid the worst effects of climate change, matching mainstream investor expectations as reflected in a 2017 vote by a strong majority of ExxonMobil shareholders demanding that the company report on its business plans for a world in which global temperature increase is kept well below 2 degrees Celsius, as well as this year’s vote by 99 percent of BP shareholders calling for the company to report on how its business plans align with the goals of the Paris Agreement, and in the recommendations of the Task Force on Climate-related Financial Disclosures.
UCS and over 30 leading investor and environmental groups support the legislation, which ensures that investors and the public have more information available to them about how companies are planning for a low-carbon future, and that science and data guide the process.
“As our work shows, climate change presents real physical risks, as well as reputational and litigation risks, to companies and will disrupt the ways the private sector operates, whether or not companies have admitted this fact,” said Mulvey. “Ensuring that climate risk disclosure is standardized will allow companies and investors to plan for the future with their eyes wide open.”