News Release: SEC Issues Important Proposal on Climate Disclosure


March 21, 2022

Carter Dougherty
(202) 251-6700

SEC Issues Important Proposal on Climate Disclosure 

WASHINGTON, D.C. — The Securities and Exchange Commission (SEC) has issued an important and thoughtful proposal to require mandatory climate financial risk disclosure from public companies. We look forward to commenting on ways that the proposal must be strengthened, in particular with respect to greenhouse gas emissions reporting and corporate climate-related impacts on communities.

“Investors have made it clear: they need more information on climate risk to make smart, sustainable investing decisions and engage with companies to manage these risks and protect their portfolios. Unfortunately, the current practice of relying on companies’ voluntary climate disclosures has led to incomplete, non-standardized, and incomparable disclosures and a proliferation of competing standards. This has forced investors and other market participants to make decisions based on incomplete and confusing information, and spend valuable time and capital on investigating sustainability claims, resources that could otherwise have been put towards productive investment in the capital market,” said Alex Martin, a senior policy analyst at Americans for Financial Reform Education Fund. “It’s squarely within the SEC’s mandate and responsibility to require mandatory disclosure of this climate-related information that so often has financial implications on corporate performance.”

The proposal includes many critical elements of climate disclosure, including companies’ climate-related risk management, strategy, and governance, the impact of climate change on companies’ financial statements, greenhouse gas emissions, and details and assumptions backing public climate commitments. The proposal should be expanded to require all large public companies to report on Scope 3 emissions on an expeditious timeline, and strengthened with respect to community-level corporate climate impacts and environmental justice metrics that investors increasingly seek.

The SEC requested public input on climate disclosure last Spring, and AFREF submitted a letter with Public Citizen and joined 61 partners on an organizational letter.

This SEC effort was recently recommended by a bipartisan report from the Financial Stability Oversight Council which stated “When disclosures are made publicly available, they protect investors and market participants by allowing them to better assess the climate-related financial risks of companies and investments…However, additional efforts are needed to strengthen climate-related disclosures.”