House Panel Approves Bill for Companies to Report Climate Risks
A House bill that would require publicly traded companies to report on their exposure to business risks from climate change has advanced.
The House Financial Services Committee approved the bill 34-25 in a July 16 vote. It is a companion to legislation that Sen. Elizabeth Warren (D-Mass.) has pitched as part of her presidential run. Rep. Sean Casten (D-Ill.) is sponsoring the legislation in the House.
The measure (H.R. 3623), which now heads toward a House floor vote, is likely to gain more traction among Democrats in the House than in the Republican-led Senate.
Many companies already provide disclosures on climate-related risks—such as impacts on operations from extreme weather events or longer term demand for fossil fuels—but they’re not standardized. The bill, originally introduced in 2018, would direct the Securities and Exchange Commission to write climate disclosure rules for companies in different industries, with added requirements for the fossil fuel industry. The SEC has issued guidelines for reporting climate-related risks but hasn’t mandated specific disclosures.
It’s one of several climate policy proposals that Warren and other Democrats running for president have floated as they appeal to voters interested in the issue. She was joined on the climate disclosure legislation by fellow 2020 contenders: Senators Kamala Harris of California, Kirsten Gillibrand of New York, and Amy Klobuchar of Minnesota.
Companies should report on climate risks like they would for other business risks, such as trade conflicts or competition, says Mindy Lubber, an advocate of the bill
“It’s like any other risk,” said Lubber, a former environmental regulator who now leads Boston-based nonprofit Ceres. Ceres is one of more than 20 environmental groups, investment management firms, and other organizations supporting the legislation.
“For every company in every sector, these risks are growing,” Lubber said.
More than 200 of the world’s largest companies are forecasting that climate change could cost them a combined $1 trillion, with much of the impact likely to hit in the next five years, according to an investor-backed disclosure campaign called CDP.
Top institutional investors BlackRock, Vanguard, and State Street have also been using their clout to press companies for better climate risk disclosures.