Feinstein, Warren, Casten, Colleagues Reintroduce Bill Requiring Public Companies to Disclose Climate-Related Risks
Apr 15 2021
Washington-Senator Dianne Feinstein (D-Calif.) joined Senator Elizabeth Warren (D-Mass.), Representative Sean Casten (D-Ill.) and a group of their colleagues to introduce the Climate Risk Disclosure Act of 2021, which would reduce the chances of environmental and financial catastrophe by requiring public companies to disclose more information about their exposure to climate-related risks. By increasing market transparency, this bill will empower investors to appropriately assess climate-related risks and accelerate the market transition from fossil fuels to cleaner and more sustainable energy sources that mitigate climate change. The introduction of this bill follows a new poll from Data for Progress showing that a majority of voters "want the government to enact and enforce mandatory disclosure rules so Wall Street does not hide behind their investments that are driving climate change."
In addition to Feinstein and Warren, the Climate Risk Disclosure Act is also cosponsored by Senators Brian Schatz (D-Hawaii), Sheldon Whitehouse (D-R.I.), Richard Blumenthal (D-Conn.), Chris Van Hollen (D-Md.), Edward J. Markey (D-Mass.), Amy Klobuchar (D-Minn.), Tina Smith (D-Minn.), Kirsten Gillibrand (D-N.Y.), Jeff Merkley (D-Ore.), Michael Bennet (D-Colo.), Tom Carper (D-Del.), Majority Leader Chuck Schumer (D-N.Y.), and Cory Booker (D-N.J.).
Representative Sean Casten introduced the House companion legislation, along with Representatives Matt Cartwright (D-Pa.), Bill Foster (D-Ill.), Alan Lowenthal (D-Calif.), Nanette Diaz Barragán (D-Calif.), Joe Neguse (D- Colo.) and Mike Levin (D-Calif.).
"We continue to experience the harmful effects of climate change, including more frequent and dangerous wildfires, droughts, floods and hurricanes. That is why the risks that climate change poses to companies must be made clear to the public and shareholders. They need to be able to factor the potential consequences of climate change into their financial decision-making," said Senator Feinstein
"It's time to wake up and fight back against giant corporations that want to pollute our environment and ask taxpayers to clean up the mess," said Senator Warren. "I'm glad to reintroduce the Climate Risk Disclosure Act to give investors, and the American public, the power to hold corporations accountable for their role in the climate crisis."
Rep. Casten said, "Climate change poses a grave and imminent threat to the stability of our financial system and its ability to sustain our economy. Senator Warren and I introduced the Climate Risk Disclosure Act requiring publicly traded companies to disclose their climate related risks to provide investors with unambiguous disclosures to accurately convey their exposure to this massive and rapidly growing risk. The right time to safeguard our financial system against climate change was a decade ago, but our last chance is now."
Climate change is an existential threat to our planet and poses severe risks for our economy. As Federal Reserve Governor Lael Brainard recently stated, "Climate change is already imposing substantial economic costs and is projected to have a profound effect on the economy at home and abroad...Financial market participants that do not put in place frameworks to assess and address climate-related risks could face significant losses on climate-sensitive assets caused by environmental shifts, by a disorderly transition, or both."
The Securities and Exchange Commission (SEC) has issued guidelines suggesting that companies consider the effects of the climate crisis on company assets, but it has not mandated that public companies disclose their exposure to climate-related risks. As a result, investors lack access to basic information about the potential impact of the climate crisis on American companies, creating enormous environmental and financial risks.
The Climate Risk Disclosure Act directs the SEC, in consultation with climate experts at other federal agencies, to issue rules within two years that require every public company to disclose:
- Its direct and indirect greenhouse gas emissions;
- The total amount of fossil-fuel related assets that it owns or manages;
- How its valuation would be affected if climate change continues at its current pace or if policymakers successfully restrict greenhouse gas emissions to meet the 1.5 degrees Celsius goal; and
- Its risk management strategies related to the physical risks and transition risks posed by the climate crisis.
The bill directs the SEC to tailor these disclosure requirements to different industries and to impose additional disclosure requirements on companies engaged in the commercial development of fossil fuels. It will help the market appropriately assess the risk of climate change and push private and government actors to address the climate crisis with the seriousness that it deserves. Without costing the taxpayer a penny, this bill will help promote financial stability at home and abroad.
The legislation is endorsed by 350.org, Americans for Financial Reform, Center for American Progress, Ceres, Data for Progress, Earthjustice, EarthRights International, Evergreen Action, National Whistleblower Center, Oxfam America, Principles for Responsible Investment (PRI), Public Citizen, Publish What You Pay - United States, Sierra Club, Sunrise Movement, Union of Concerned Scientists, and US SIF: The Forum for Sustainable and Responsible Investment.