U.S. Senator Tina Smith Pushes For Public Companies to Disclose Risks from Climate Change

Statement

Today, U.S. Senator Tina Smith (D-Minn.) announced that she is pushing for new requirements for publicly traded companies to disclose critical information about how much they are contributing to climate change, including the extent of their greenhouse gas emissions and their exposure to climate risk.

Originally introduced in 2018, the Climate Risk Disclosure Act will help investors appropriately assess climate-related risks, accelerate the transition from fossil fuels to cleaner and more efficient energy sources, and reduce the risks of both environmental and financial catastrophe.

It builds on the work of former Vice President Al Gore, who has warned that ignoring the risks of climate change is producing a "carbon bubble" that will have severe economic consequences. The bill was led by Sen. Elizabeth Warren (D-Mass.).

"The United States can either lead or follow when it comes to the clean energy transition," Sen. Smith said. "I believe we should lead. This legislation would help investors know the serious risks associated with our changing climate, and then help us get to work on combatting these risks for the good of our public health and America's economic competitiveness."

The Climate Risk Disclosure Act directs the U.S. Securities and Exchange Commission (SEC), in consultation with climate experts at other federal agencies, to issue rules within one year that require 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 1.5 degrees Celsius goal; and
Its risk management strategies related to the physical risks and transition risks posed by the climate crisis.
The Climate Risk Disclosure Act also directs the SEC to tailor these disclosure requirements to different industries and establish additional disclosure requirements on companies engaged in the commercial development of fossil fuels. The legislation will help the market appropriately assess the risk of climate change which will help push private actors and government actors to act more decisively to address the climate crisis and promote financial stability without costing a penny of taxpayer money.

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