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In March, the U.S. Securities and Exchange Commission issued a draft ruling on the regulation of corporate climate risk disclosure. The ruling requires that corporations disclose relevant climate risks and greenhouse gas emissions associated with operations, as well as include climate-related metrics in audited financial statements.
Last year, during the drafting process, the SEC requested public comments on the proposed rule. Woodwell Climate Research Center and Wellington Management coordinated a response, pushing for transparent, thorough, and accurate climate risk assessments and disclosure.
The proposed rule is open for public comment until June 17, 2022, and Woodwell is once again working alongside Wellington Management to coordinate comments.
“The SEC has recognized the importance of climate risk to financial systems, and they are moving forward. This is excellent progress, but for these new rules to be effective they need to hear from climate scientists and climate risk experts,” said Woodwell’s Chief of External Affairs, Dave McGlinchey.
In order to be effective, risk disclosures need to be standardized and consistent between corporations. Additionally, transparency is important in the risk assessment process, to ensure corporations are using comparable, science-backed models to accurately report on risk.
“If the SEC doesn’t provide guidelines on how physical climate risk is assessed, the rules will be toothless and corporations will be able to pay for the results that they want. We are looking to avoid a race to the bottom,” McGlinchey said.