Esg Disclosure Simplification Act of 2021

Floor Speech

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Mr. CASTEN. Mr. Speaker, I rise in support of my legislation, the Climate Risk Disclosure Act, H.R. 1187.

I would like us all to imagine for a moment that you had all of your wealth tied up in a single company, and you knew that that company was on track to lose nearly 20 percent of its value thanks to a known and avoidable threat. You call the CEO, and the CEO responded by saying: We have it taken care of, but I am not going to explain how.

That is the reality that the climate crisis is creating for our global economy.

Swiss Re recently found that global GDP will decrease by 4 percent if we meet the Paris climate accords, and if we stay with business as usual, 18 percent.

Domestically, the CFTC has come to roughly the same conclusion, estimating that for every 1 degree Celsius rise in temperature, we can expect a 1.2 percent reduction in annual GDP growth.

Mr. Speaker, I say to my friends that that is material. It is a big deal.

Those economic losses are due to the wildfires, droughts, blackouts, and superstorms that have already caused $500 billion of damages in the past 4 years, and investors understand this.

The fossil fuel industry has spent 10 years slashing prices. And do you know what? They are still losing market share to lower-cost renewables and efficiency.

ExxonMobil didn't write down $20 billion because they are woke. They wrote down $20 billion because the free market is beating them.

Investors want to know how to reallocate their capital in response to that risk. They want to know how to allocate it to more productive uses. That is why there were over 140 climate-related shareholder proposals at U.S. companies during the 2020 proxy season. But we, in this body, have not done our job to protect those investors.

Let us be very clear. When we talk about investor protection, every company in the world would like to have asymmetry of information. Our job is to make sure that if you love free markets as much as I do, as much as those of us on this side of the aisle do, then you have to make sure that they have full transparency of information. Right now, public companies have no obligation to disclose their exposure to climate- related risks, nor is there a consistent format for those disclosures. This bill would fix that.

It directs the SEC to issue a rule requiring 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 goals, and its risk management strategies related to the physical and transitional risks of the climate crisis.

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Mr. CASTEN. Mr. Speaker, I want to reassure my friend from Arkansas that the bill does direct the SEC to tailor those disclosure requirements to different industries to make sure that the burden is borne most heavily by those companies with the greatest contribution to that risk.

When it comes to making this transition, markets are some of the most powerful tools we have, but efficient markets depend on transparent information. It is on us to provide that efficiency, to unleash the power of our entrepreneurs and our capitalists to create jobs and economic growth, and to leave a better planet than the one we inherited--but only if we act.

This is a win for capitalism, a win for consumers, and a win for the planet that we will pass on to our grandchildren.

Mr. Speaker, I urge my colleagues to vote in support of this legislation.

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