Meaning. Schatz and Whitehouse Highlight SEC Priorities on Climate Disclosure
U.S. Senators Brian Schatz (D-HI) and Sheldon Whitehouse (D-RI) highlighted several priorities of the U.S. Securities and Exchange Commission (SEC) in its assessment of climate change disclosure regulations.
“The market needs to know to what extent individual issuers are exposed to climate risks and how they plan to manage their exposure. This information should be useful for investors’ decision: detailed, linked to financial statements and easily comparable between different companies, ”said Schatz. “The SEC has the power and the obligation to improve market efficiency and reduce systemic risk by requiring climate disclosure. And this must include the disclosure of funded shows: the contributions of financial companies to the climate crisis through their finance and investment work. We need to ensure that the stated climate goals of these companies are consistent with their actual business activities. “
In their letter to SEC Chairman Gary Gensler, senators said the SEC should incorporate climate risk into audited financial statements so that auditors can assess whether the assumptions underlying the financial data are clear as to the likelihood. such risks.
The disclosures should also include off-balance sheet activities that exacerbate this systemic risk, even if they do not present an immediate risk to the financial firm.
In addition, lawmakers suggest that the SEC incorporate climate disclosure into the filing of prospectus issuers with the Commission regarding securities offerings. In addition, disclosures should include details of political spending and lobbying activities of climate-related companies.
“The market will be a very powerful force in curbing climate change if investors can obtain the information necessary to assess the actual levels of exposure of financial companies to climate risks,” said Senator Whitehouse. “Improving climate disclosure standards will also help ensure that companies – many of which have excellent declared climate policies – actually work when it comes to lobbying and investment,” Whitehouse said.