Casten’s Climate Risk Disclosure Act Passes House
Washington, DC – Today, the U.S. House of Representatives passed the Climate Risk Disclosure Act of 2021, H.R. 2570, legislation introduced by Congressman Sean Casten (D-IL) to require public companies to disclose information about their exposure to climate-related risks. Senator Elizabeth Warren (D-MA) has championed this issue alongside Casten, introducing the Senate companion bill, S.1217.
Despite escalating calls for action from scientists, economists, business leaders, and investors, the U.S. lags far behind our global partners in safeguarding our financial system against the climate crisis. By increasing market transparency through the establishment of clear, easily comparable climate disclosure standards, Casten’s bill will empower investors to appropriately assess climate-related risks, safeguard against financial risk resulting from environmental catastrophes, and help the market transition from fossil fuels to cleaner, more sustainable energy sources in time to prevent the worst impacts of the climate crisis.
Casten said, “When it comes to making the transition from fossil fuels to cleaner, cheaper energy, markets are some of the most powerful tools we have. But for markets to work efficiently, investors need transparency. By requiring publicly traded companies to disclose all climate-related risks, my bill will empower investors to make smarter decisions and harness the power of the free market to help us win the race against the climate crisis before it’s too late.”
To watch Casten’s remarks on the House floor earlier today, click here or on the image below.
Currently, public companies are not mandated to disclose their exposure to climate-related risks. As a result, investors lack access to basic information about the potential impact of the climate crisis on American companies, creating enormous environmental and financial risks.
The House passage comes on the heels of the Securities and Exchange Commission (SEC), recent request for public comment on climate risk disclosure rules. On Friday, Congressman Casten and Senator Warren submitted a comment letter to the SEC’s request for public comment on climate disclosures, making the case that the current voluntary framework is not sufficient for investors to fully understand the risk they’re exposed to and urging the SEC to mandate climate risk disclosure for public companies as the Climate Risk Disclosure Act would codify legislatively.
The Climate Risk Disclosure Act directs the SEC, in consultation with climate experts at other federal agencies, to issue rules within two years 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 Union of Concerned Scientists recently released a letter of support for the Climate Risk Disclosure Act signed by 82 organizations across a broad ideological spectrum.
Casten’s Climate Risk Disclosure Act is cosponsored by U.S. Representatives Matt Cartwright (D-PA), Bill Foster (D-IL), Alan Lowenthal (D-CA), Nanette Diaz Barragán (D-CA), Joe Neguse (D-CO), Mike Levin (D-CA), Julia Brownley (D-CA), Nydia Velazquez (D-NY), Dean Phillips (D-MN), Brad Sherman (D-CA), Raúl Grijalva (D-AZ), Jesús “Chuy” Garcia (IL), and Ayanna Pressley (D-MA). Warren’s Senate companion is cosponsored by Brian Schatz (D-Hawaii), Sheldon Whitehouse (D-RI), Richard Blumenthal (D-CT), Dianne Feinstein (D-CA), Chris Van Hollen (D-MD), Edward J. Markey (D-MA), Amy Klobuchar (D-MN), Tina Smith (D-MN), Kirsten Gillibrand (D-NY), Jeff Merkley (D-OR.), Michael Bennet (D-CO), Tom Carper (D-DE), Majority Leader Chuck Schumer (D-NY), and Cory Booker (D-NJ).
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