SEC Meeting to Consider Mandatory Climate Risk Disclosures

The United States Securities and Exchange Commission meets today for considering mandating climate risk disclosures by public companies. The chair of SEC, Gary Gensler, said investors are increasingly looking for opportunities and want to know the risks involved with companies. The mandatory climate disclosures will facilitate them to make more consistent and comparable information on environmental, social and governance (ESG).

In March last year, the SEC released a report following comments on whether companies must disclose their climate and ESG information, and it said later in May that it was working on such disclosures. The SEC originally published guidance on climate-related disclosures in 2010.

Many businesses want government involvement in ESG regulations and standards. In November last year, more than 150 companies sent a letter to Congress urging to pass the now-stalled Build Back Better Act. Many climate organisations, including the Task Force on Climate-Related Finacial disclosures, have sought similar standards.

Sustainability goals have become a top priority for many enterprises and important to financial results in some cases. Leaders say reporting and disclosures are two of the biggest challenges they face. Most investors surveyed in a Dykema study said they expect to screen for ESG risk in 12 months.

Companies are obliged to share information regularly with investors. Mandatory disclosures will help investors put their money in companies without taking any chances.