SEC Signals Tougher Rules for Corporate Climate Disclosures

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The U.S. Securities and Exchange Commission is sending its strongest signal yet that corporations will have to disclose more to shareholders about how climate change affects their businesses.

Allison Herren Lee, the regulator’s acting chair, announced Monday that the agency will solicit public comment on potential policy changes. “It’s time to move from the question of “if” to the more difficult question of how we obtain disclosure on climate,” Lee said in a speech before the Center for American Progress, a Democratic trade group.

Lee is setting the stage on climate for Gary Gensler, President Joe Biden’s pick to lead the SEC who is awaiting Senate confirmation. It will be up to him to implement any overhaul of public-company disclosure requirements based on feedback the agency receives. Among issues the SEC is seeking comment on are whether it should set different standards for various industries and whether investors should have a say in what specific corporations have to reveal.

Lee’s proactive approach on climate disclosures has drawn opposition from Republicans, including critical comments from the SEC’s two GOP commissioners. Responding to reports on her speech, Pennsylvania Senator Pat Toomey, the top Republican on the Senate Banking Committee, tweeted: “This would be a total abuse of power and a politicization of SEC’s disclosure standard.”

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