SEC Takes Important Step to Address Corporate Greenwashing

Today, the Securities and Exchange Commission (SEC) released a draft rule that will require publicly traded companies to disclose their greenhouse gas emissions as well as the climate risks their businesses face.

There is a growing consensus among financial regulators that climate change poses significant risks to our financial system, and that regulators have a role to play in mitigating those risks in order to protect our communities and our economy. Requiring companies to disclose standardized information on climate risks is an important step in providing investors, other market participants and the public with clear, consistent, and comprehensive information to support more informed and sustainable investment decisions.

Last June, the Sierra Club and partners submitted public comments from experts and tens of thousands of Americans in response to the SEC's call for input to develop the draft rule on climate disclosures. Sierra Club and partners have also submitted supplemental comments to the SEC to address important aspects of the rulemaking process, including a letter last month encouraging the SEC to include robust disclosure requirements for the use of carbon offsets. The draft rule requires disclosure of Scope 1 and 2 emissions, but allows for generous carve-outs for companies to avoid disclosing their Scope 3 emissions - indirect emissions from their supply chain which, for many companies, make up the bulk of their climate impact.

The SEC announced it would provide a 60 day comment period for public feedback on the proposed rule.

In response, Ben Cushing, Campaign Manager for the Sierra Club's Fossil-Free Finance campaign released the following statement:

"Today the SEC took the long-overdue step of proposing a solution to the problem of undisclosed climate risks. Investors and the public deserve to know the climate-related risks that companies face and how they are being addressed. This is especially important given how many companies have made commitments to address their climate impact without disclosing the full scope of their emissions, the risks their own businesses face from climate change, or the relevant business plans to achieve their climate pledges. Understanding and mitigating growing climate risks is critical to building a stronger financial system and protecting investors and communities from climate-related shocks. We look forward to closely reviewing this proposal and offering suggestions to strengthen it, and we urge the SEC to move quickly to finalize the strongest rule possible."