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Corporate America must be compelled to fess up about the, a coalition of state attorneys general told the Securities and Exchange Commission on Monday.
In a comment letter obtained exclusively by CNN Business, California and nearly a dozen other states warn that the SEC's current disclosure rules are inadequate given theand the .
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"Climate change is not a distant problem to be dealt with in the future," the letter to the SEC reads. "It is here, and it threatens the US economy and its financial system."
The letter, signed by the Democratic attorneys general of Connecticut, Delaware, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Oregon, Vermont, Maryland and Wisconsin, calls for "comparable, specific and mandatory" climate-related disclosures by SEC-regulated firms.
Specifically, the states urged the SEC to require companies to make annual disclosures of their emissions and any plans to address them; analyze and disclose the potential impacts of both climate change and climate regulation; and disclose policies on corporate governance and risk management related to climate change.
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The pressure from states comes ahead of Tuesday's deadline set by the SECon the agency's climate change disclosure rules.
The SEC has already received more than 5,000 comments in response to its mid-March request for public input. The agency has alsowith companies and business groups, including with the representatives of Apple, JPMorgan Chase, Uber, Walmart, Royal Dutch Shell, ConocoPhillips, the US Chamber of Commerce and Business Roundtable.
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In its 22-page comment letter, the California-led coalition argues that mandatory climate disclosures are "essential" not only to the SEC's mandate to protect investors but also to "ensure efficient capital formation and allocation."
"Given the demand from investors for such disclosures, the significance of climate change risk to companies, and the importance of efficient capital allocation to climate-resilient companies, such disclosures are squarely in the public interest," the letter reads.
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The states note that many US companies do not make climate-related disclosures and have no plans to do so in the future. Others issue "boilerplate" disclosures that "suggest that they are not thoroughly evaluating or disclosure their exposure," the letter said.
States say they have a vested interest here because climate change is causing extreme weather events that damage local communities and sap public resources. California in particular has been rocked by deadly wildfires that could worsen as the climate crisis deepens. Rising sea levels threaten coastal communities and risk severe flooding.
At the same time, climate change and the transition to clean energy poses legal, business and physical risks to companies — including ones that states and their residents invest in directly or through retirement accounts and pension programs.
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Subscribe today to the Washington Examiner magazine and get Washington Briefing: politics and policy stories that will keep you up to date with what's going on in Washington. SUBSCRIBE NOW: Just $1.00 an issue! © Provided by Washington Examiner DOE Header 2020 THE UNSPOKEN TENSIONS IN BIDEN-EU SUMMIT: The official White House statement recapping the U.S.
The comment letter points out that climate-related weather events have imposed more than $600 billion in direct economic damages on US companies since 2016, according to
"As the state prepares for the twin crises of drought and wildfires, Californians have a right to know what exposure their investments — including college savings, pensions and retirement accounts — have to climate change," California Attorney General Rob Bonta said in a statement.
Debating the role of the SEC
However, some business groups and Republicans are urging the SEC not to overstep its authority by imposing burdensome climate regulation.
All Republican members of the US Senate Banking Committeeon Sunday stating that new regulations to specifically address global warming are not necessary or appropriate.
"The SEC is an independent financial regulator, whose political insulation reflects its narrow focus on the financial markets," the GOP letter said. "It does not have a mission of remaking society or our economy as a whole."
And they argued the push for more disclosure is being driven by efforts to appease asset managers and other third-party stakeholders.
"Activists with no fiduciary duty to the company or its shareholders are trying to impose their progressive political views on publicly traded companies, and the country at large," the letter reads
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Last month, thethat would require the SEC to establish climate-related risk disclosure metrics and public companies to disclose the financial and business risks they face from climate change.
Investors want more transparency
The SEC last guided companies on how to disclose climate change issues in 2010, when the agency issued guidance indicating information about climate risks and opportunities might be required to be disclosed.
"Since 2010, investor demand for, and company disclosure of information about, climate change impacts and opportunities has grown dramatically," the SEC said in its March request for information.
Indeed, activist investors recentlyfollowing a . The proxy fight between Exxon and hedge fund Engine No. 1 was the first at a major US company where the case for change was built around the transition away from fossil fuels.
Last week, more thancalled on world leaders to implement mandatory climate risk disclosure requirements and take other steps to more forcefully confront the climate threat.
"Climate risks could damage and destabilize the United States economy — and with it, the value of investor holdings," the California-led coalition argued Monday, "if companies, regulators and investors cannot effectively manage them."
A healthier planet and economy is worth fighting for .
What the science tells us is that until the climate crisis is under control, these extreme weather disasters will only worsen. But there is hope. At the new EPA, science and facts are back. And as we continue on the path to recovery, people across the country know we can't afford to not act on the climate crisis.That's why voters elected President Biden and Vice President Kamala Harris - the administration with the strongest start on climate change of any presidential administration. Together we can address the climate crisis and build back our economy better than before.