…to disclose their greenhouse gas emissions. In the 1970s the US Securities and Exchange Commission (SEC) issued a rule that corporate registrants include the financial impact of existing environmental risk in their corporate filings. In 2010 the SEC issued amendments to the rule charging companies to identify “the known trend, demand, commitment, event, or uncertainty” in their annual 10K report. The rule states that “there may be significant physical effects of climate change that have the potential to have a material effect on a registrant’s business and operations. These effects can impact a registrant’s personnel, physical assets, supply chain, and distribution chain”. The 10K report is signed by the Chief Executive Officer of the company, making climate change as important as the financial information reported to the investors.
Investors support better SEC reporting because it should provide information on the risks and opportunities that their assets face. In a recent New York Business Journal article Bloomberg CEO Daniel Doctoroff discussed the importance of the SEC disclosure: “If all public companies begin to submit industry-specific (environmental, social, and governance) data using the Sustainability Accounting Standards Board (SASB)’s industry-specific metrics, we could see billions, if not trillions, of investment dollars move to companies that take sustainability seriously from those who don’t.”
However, according to some studies, SEC’s greenhouse gas disclosure mandate is followed by only a quarter of companies. The SEC’s plan to make America’s corporation more transparent about their GHG emissions profile is missing the mark. More binding reporting requirements may be required to improve transparency and corporate sustainability.
(Lack of) Carbon Disclosure in the US
Several organizations provide guidelines for monitoring and tracking greenhouse gas emissions and climate-related risks to be used in annual filings to the SEC.
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