ATTORNEY GENERAL RAOUL SUPPORTS SEC PROPOSAL TO REQUIRE U.S. COMPANIES TO DISCLOSE FINANCIAL RISK FROM CLIMATE CHANGE
Chicago — Attorney General Kwame Raoul joined a coalition of 19 attorneys general in support of the Securities and Exchange Commission’s (SEC) proposal to require U.S. companies to provide accurate and detailed information about the financial risk they face from climate change.
In Friday’s letter to the SEC, Raoul and the coalition argue 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.
“The science is clear – climate change is real, and the effects will continue to wreak havoc on our environment the longer we fail to take decisive action,” Raoul said. “As serious weather events become more damaging and widespread, it is imperative residents and governments know its financial implications as well.”
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, according to Raoul and the coalition. As these events increase in intensity and frequency, their impacts on companies will only grow. Already, the per-year cost of climate disasters has increased from an average 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 a whopping $148 billion. This does not include indirect costs from climate change, such as short-term and long-term health care costs resulting from wildfire smoke inhalation.
These economic impacts pose serious concerns for the more than 50% of U.S. households with money invested in the stock market, including retirement savings, college funds and other life savings. Last year, Americans held $7.3 trillion in 401(k) plans and $13.2 trillion in IRAs. These investors need information about corporations’ exposure to climate-related financial risk to make smart investment decisions, yet only 20% of North American companies currently make any climate-related disclosures.
In their letter, Raoul and the coalition also express their 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. According to Raoul and the coalition, the proposed rule is well-within the SEC’s statutory authority and should be finalized immediately.
Joining Raoul in filing the comment letter are the attorneys general of California, Colorado, Delaware, Hawaii, Maine, Massachusetts, Maryland, Michigan, Minnesota, New Mexico, Nevada, New York, Oregon, Rhode Island, Vermont, Washington, Wisconsin and the District of Columbia.