The U.S. Securities and Exchange Commission recently proposed a new federal rule requiring all publicly traded companies to disclose climate risks and carbon emissions. It’s meant to provide greater transparency to guide investor decisions. The proposed regulation is not a surprise in itself — it was broadly signaled and much anticipated. But whether the rulemaking is finalized into regulation or not, there’s a transformative impact that few realize. By covering U.S. publicly traded banks, this rule would, in one giant step, cover climate emissions across a major swath of the global economy.
What If Banks Had to Disclose the Climate Impact of Their Investments?
A proposed SEC rule could pull back the curtain on the carbon emissions of the global economy.
May 20, 2022
Summary.
The U.S. Securities and Exchange Commission recently proposed a new federal rule requiring all publicly traded companies to disclose climate risks and carbon emissions. This rule holds the potential to make huge progress by forcing banks to disclose which carbon-intensive projects they are financing. If passed, the rule will give bank investors greater transparency on the global climate emissions generated by their investment; once disclosed, banks will work to reduce their carbon exposure, which means new products and new terms to finance low carbon projects — globally. People should understand the transformative effects of disclosing the carbon impacts of bank financing, if only the SEC rule can pass.