Tuesday, December 29, 2020
Public companies will be required to disclose climate risks and greenhouse gas emissions under President-elect Biden’s administration. The Securities and Exchange Commission (SEC) will institute rulemaking and guidance on the federal monitoring of environmental, social and governance (ESG) issues. The Biden administration’s decision to require climate report disclosures follows complaints from investor advocacy groups about inconsistent disclosure practices due to voluntary reporting frameworks.
Under the outgoing Trump administration, SEC Chairman Jay Clayton relied on a “principles-based approach” to climate disclosure. Through this approach, the SEC loosened certain requirements for companies under Regulation S-K and relaxed conflict-of-interest rules for independent auditors under Regulation S-X. Requirements were eased this past August and October in a pair of highly controversial split decisions.