On February 26 the Subcommittee on Investor Protection, Entrepreneurship and Capital Markets of the House Financial Services Committee held a hearing that included discussion of the “Climate Risk Disclosure Act of 2021” introduced by Rep. Sean Casten (D-Ill). This bill calls for the Securities and Exchange Commission to amend Section 13 of the Securities Exchange Act of 1934 to require companies to disclose on the “(i) physical risks posed to the covered issuer by climate change; and ‘‘(ii) transition risks posed to the covered issuer by climate change.” It was passed along partisan lines by the full Financial Services Committee in 2019. Sen. Elizabeth Warren (D-Mass.) introduced a similar bill in the Senate and on August 12, 2020 sent a letter to then SEC Chairman Jay Clayton urging him “to implement standard climate risk disclosures so that investors and the public can accurately assess and address climate-related environmental and financial threats.”

Not surprisingly, in an administration where former President Trump instructed the Environmental Protection Agency to remove the words “climate change” from its website, little progress was made. Given the high priority the Biden administration is giving to climate change, there is now a real opportunity to improve corporate disclosures on climate change.

Of course, the naysayers haven’t gone away, such as Rep. Anthony Gonzalez (R-Ohio) who argues that the motivation behind mandating sustainability-related disclosures is to solve political or moral problems and not to protect investors. Yet investors, such as Climate Action 100+  a group of 545 investors representing $52 trillion in assets, have been clamoring for better corporate disclosure on climate change for many years.

Or subcommittee ranking member Bill Huizenga (R-Mich.) who claims that expanded disclosure requirements would add regulatory burdens for publicly listed companies and discourage private companies from going public. Yet companies are increasingly making voluntary disclosures based on investor demands and a recognition that climate change is something that will affect their ability to create value for their shareholders over the long term. The Business Roundtable, hardly a far-left group of polar bear lovers, has issued its position on climate change which states that “Unchecked, climate poses significant environmental, economic, public health and security threats to countries around the world, including the United States.” Disclosures on the effects of climate change are an important part of the IBC/WEF Initiative, a global group of CEOs from some 120 leading companies, supporting stakeholder capitalism.

Polar bear on ice floe. Melting iceberg and global warming. Climate change | GETTY

The remarks of Gonzalez and Huizenga reveal a certain irony, and one common with many of their fellow members in the GOP. They are taking the position that those concerned about climate change are doing so from an ideological, rather than science-based, stance. Yet they are the ones arguing based on ideology, perhaps not surprising in a party that is becoming increasingly untethered from reality.

Back in the real world, progress is being made on many fronts when it comes to climate change. The part I’m most familiar with is accounting and reporting. As I’ve written about before, the Trustees of the IFRS Foundation have proposed establishing a “Sustainability Standards Board” (SSB). They received 577 comment letters from investors, companies, accounting firms and associations, other trade and professional associations, governmental bodies, regulatory organizations, multilateral organizations, NGOs, and academics showing overwhelming support for this idea.

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