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Encore: The SEC wants companies to disclose how climate change is affecting them

KELSEY SNELL, HOST:

It's a reality of Wall Street - public companies regularly have to disclose all sorts of information to investors, things such as their financial performance and risks they face. But soon they may have to provide detailed data about their greenhouse gas emissions and how their performance could affect climate change. In this encore presentation, NPR's David Gura reports that would mark a historic change.

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DAVID GURA: Fires and floods - we live in a world increasingly affected by climate change. Global warming, hurricanes and torrential rains impact not only us but companies, too, and increasingly, investors want to know how companies are assessing and mitigating these risks. The Securities and Exchange Commission just unveiled a proposal that's more than 500 pages long that would mandate new climate risk disclosures. Here's SEC Chair Gary Gensler.

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GARY GENSLER: It would provide investors with consistent, comparable, decision-useful information for making their investment decisions.

GURA: Many companies already share climate risk data voluntarily with nongovernmental organizations. But if the SEC approves these rules, companies would be required to report climate risk data to regulators regularly and in a uniform way. They'd have to report information on greenhouse gas emissions and how much energy they consume, including electricity. Most controversially, regulators could require public companies under certain circumstances to disclose emissions data from every partner on their supply chains. These are what are known as Scope 3 emissions. Lee Reiners teaches financial regulation at Duke University.

LEE REINERS: Scope 3 is the largest component of any company's greenhouse gas emissions. So if investors are concerned about the company's climate footprint and climate risk, they really need to have this Scope 3.

GURA: In its proposal, the SEC left some wiggle room for companies to decide when these emissions are important enough to disclose. But some businesses plan to fight against it nonetheless, and so does the U.S. Chamber of Commerce. Opponents say requiring the collection of so much data would be exceedingly difficult, and they don't believe the information is necessarily critical to investors. Reiners says that unless there are significant changes, the fight could move to the courts.

REINERS: And I think the whole rule will be litigated on, you know, traditional kind of cost-benefit grounds and being arbitrary and capricious.

GURA: But regardless of what final rules are adopted, the reality is that in the United States, like in many countries, companies will not be able to avoid disclosing risks they face from climate change.

David Gura, NPR News, New York.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.