Senator Warren Introduces Bill to Mandate Disclosure of Climate Risk in SEC Filings

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Sep 14, 2018

On September 14, 2018, the U.S. Senate released the "Climate Risk Disclosure Act", which requires public companies to disclose more information about their exposure to climate-related risks, which will help investors appropriately assess those risks, accelerate the transition from fossil fuels to cleaner and more efficient energy sources, and reduce the chances of both environmental and financial catastrophe.

In a summary published by Davis Polk LLP, the Climate Risk Disclosure Act would require the SEC to issue rules for every public company to disclose:

  • Its direct and indirect greenhouse gas emissions
  • The total amount of fossil-fuel related assets that it owns or manages
  • How its valuation would be affected if climate change continues at its current pace or if policymakers successfully restrict greenhouse gas emissions to meet the Paris accord goal; and
  • Its risk management strategies related to the physical risks and transition risks posed by climate change

The SEC can tailor the rules to different industries, and impose additional requirements on companies in the fossil fuel industry.

Review the Act on the U.S. Senate's website.

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