AG HEALEY SUPPORTS SEC PROPOSAL REQUIRING COMPANIES TO DISCLOSE
FINANCIAL RISKS OF CLIMATE CHANGE
Multistate Comments Argue for Greater Disclosure to Meet Growing
Investor Demands and Protect Residents’ Retirement Savings and Other
Investments
BOSTON –
Attorney General Maura Healey today joined a coalition of 19 attorneys general
in support of a proposal by the
Securities and Exchange Commission (SEC) spelling out requirements for public
U.S. companies to provide accurate and detailed information about the financial
risks their businesses face from climate change.
This week, nearly one-third of the U.S.
population was under an extreme heat warning, and a once-in-a-century drought
is causing ongoing losses in revenue from agriculture, tourism, and more. These
impacts will only worsen in the coming years. The coalition’s letter argues that mandatory climate
change-related disclosures are essential to guard U.S. and global financial
systems against systemic risks associated with climate change and to protect
investors, including the millions of residents with investment-based retirement
savings, as well as the states’ own public pension funds.
“The climate crisis is here, it is destructive, and it is expensive,” AG Healey
said. “It threatens to wreak serious havoc on our financial markets and the
investments that our residents have made to fund their retirements or pay for
their children’s college. We support the SEC in taking this essential step to
require companies to disclose the climate-related risks to their businesses.”
As the coalition discusses in the letter, investors have been clear that
climate-related risks are material to their investment decisions and they need
specific, comparable disclosures about those risks, including their greenhouse
gas emissions, and more information about how companies are managing them. The
physical impacts of climate change already threaten companies and their
operations, and those effects will only grow as extreme weather events caused
or exacerbated by climate change increase in intensity and frequency. 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. Already, climate-related disaster costs have increased from an
average cost of $19.5 billion per year in the 1980s to $148 billion in 2021.
Many other costs from climate change, such as short-term and long-term healthcare costs resulting from extreme heat and wildfire
smoke inhalation, are also mounting.
At the same time,
companies face economic impacts from government efforts and market pressures to
reduce greenhouse gas emissions, transition economies to clean energy sources,
and bolster climate resilience. Without reliable, standardized disclosures
about company emissions and these risks, investors – including the Commonwealth
and its residents – are unable to meaningfully compare companies or accurately
price the risks companies face. The coalition underscores that the proposed
rule will also help prevent companies from “greenwashing” their businesses with
misleading claims to investors about their climate risks and transition plans.
The letter also points out that the SEC’s proposed rule is fully within the
SEC’s authority to establish disclosure requirements to protect investors.
Last year, AG Healey
also worked with a coalition of attorneys general to call on the SEC to
prescribe climate change-related disclosures like the ones in the proposed
rule. The letter submitted today further encourages the SEC to strengthen and
improve the proposed rule, including by defining certain terms, expanding the
rule’s scope, and accelerating the timelines for compliance. Earlier this year,
AG Healey co-convened a public webinar series, Seeing the Dangers Ahead: How
Regulators and Advocates Can Harness Physical and Financial Risk Data to Tackle
the Climate Emergency, which included a session on
climate financial risks and the increasing importance to investors of greater
climate risk disclosures by companies.
AG Healey has sought
to protect Massachusetts investors from deceptive statements about climate risk
through enforcement of the Massachusetts Consumer Protection Act. In 2019, AG
Healey sued ExxonMobil, alleging that the global oil
company has been unlawfully misrepresenting, omitting, denying, and downplaying
the risks that climate change poses to its business, as well as failing to
disclose to Massachusetts investors the systemic financial risks from climate
change. Just last month, Massachusetts’ high court unanimously held that
AG Healey could move forward with this lawsuit, which also alleges the company
is unlawfully deceiving consumers about the climate dangers of its fossil fuel
products and by “greenwashing”
itself as an environmentally friendly company.
AG Healey joins the attorneys general of California, Colorado, District of Columbia,
Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, New Mexico,
Nevada, New York, Oregon, Rhode Island, Vermont, Washington, and Wisconsin.
This matter is being
handled for Massachusetts by Assistant Attorneys General Margaret Sullivan,
Julia Jonas-Day, and Grace Gohlke and Bureau Deputy Chief Christophe Courchesne of AG Healey’s Energy and Environment
Bureau, with assistance from AG Healey’s Insurance and Financial Services
Division.