Attorney General Tong Supports SEC Proposal to Require U.S. Companies to Disclose Financial Risk from Climate Change(Hartford, CT) -- Attorney General William Tong joined a coalition of attorneys general in support of the Securities and Exchange Commission's (SEC) proposal to require U.S. companies to provide accurate information about the financial risk they face from climate change.
“Climate change is not only a public health and environmental crisis —it is also a looming financial and economic crisis. Extreme weather events have cost companies hundreds of billions of dollars in the past five years alone, and the financial harms and instability will only increase. This SEC proposal will provide crucial transparency necessary to shield our retirement savings and investments,” said Attorney General Tong.
Extreme weather events caused or exacerbated by climate change, such as hurricanes, wildfires, extreme heat, and extreme drought, have cost U.S. companies more than $760 billion in the past five years alone. As these events increase in intensity and frequency, their impacts on companies will only grow. Already, the average cost per year of climate disasters has increased from an average cost of $19.5 billion per year in the 1980s to $89.2 billion per year in the 2010s. In 2021, the cost to the U.S. economy rose to $148 billion. This does not include indirect costs from climate change, such as short-term and long-term healthcare costs resulting from wildfire smoke inhalation.
Mandatory climate change-related disclosures are essential to guard U.S. and global financial systems against systemic risk associated with climate change and to protect investors, including the many ordinary Americans whose retirement savings are investment-based. Investors need information about corporations’ exposure to climate-related financial risk to make smart investment decisions, yet only 20 percent of North American companies currently make any climate-related disclosures.
The coalition expresses its strong support for the SEC’s proposed rule, which will ensure that investors receive specific, comparable information about companies’ climate-related financial risks. The SEC’s decision to require climate change-related disclosures from all industries and companies of all sizes aligns with the coalition’s comments last year highlighting that no company or industry is immune to financial risk or impacts from climate change. Requiring corporate disclosure of financial risk will also provide an effective counter to greenwashing – false claims by a company that its policies are environmentally sustainable. The proposed rule is well within the SEC’s statutory authority and should be finalized immediately.
Attorney General Tong joins the attorneys general of California, Colorado, District of Columbia, Delaware, Hawaii, Illinois, Maine, Massachusetts, Maryland, Michigan, Minnesota, New Mexico, Nevada, New York, Oregon, Rhode Island, Vermont, Washington, and Wisconsin in filing the letter.
A copy of the letter is available here.
Assistant Attorney General William Dornbos and Chief of the Environment Section Matthew Levine assisted the Attorney General with this matter.