- Office of Attorney General Maura Healey
Media Contact for AG Healey Calls on SEC to Require Companies to Disclose Financial Risks of Climate Change
BOSTON — Massachusetts Attorney General Maura Healey today joined a coalition of attorneys general in calling on the Securities and Exchange Commission (SEC) to require U.S. companies to provide specific and accurate information about the financial risks their businesses face from climate change. The attorneys general contend these disclosures are fully within the SEC’s authority and are urgently needed to protect the retirement savings and other investments of millions of Americans.
In the letter, the coalition argues that climate change poses a wide range of serious risks that threaten companies’ financial health and, more broadly, could contribute to systemic shocks to financial markets that imperil investor holdings. In the past five years alone, climate change-related weather events cost U.S. companies more than $600 billion in direct economic damages, and conservative estimates of future damages are much greater.
“The climate crisis threatens serious financial harm for U.S. companies, financial markets, and the investments our residents have made to fund their retirements or pay for their children’s college,” AG Healey said. “We’re calling on the SEC to require companies to disclose the risks climate change poses to their businesses, so that we can protect our residents and their savings.”
“Climate change is not a distant problem to be dealt with in the future; it is here, and it threatens the US economy and its financial system,” the coalition writes in the letter. “Demand from institutional and retail investors for American companies to respond to the financial and other impacts of climate change has grown significantly over the last decade,” the letter argues, including from Massachusetts investors. Last month, for example, shareholders elected three new members to ExxonMobil’s board of directors who are seeking to address the financial risks to investors of the company’s poor climate change planning.
In today’s comment letter, the attorneys general urge the SEC to mandate with clarity and specificity that companies must assess climate change-related risks affecting their businesses and disclose that information to investors. While SEC-regulated firms have always been required to disclose material information like climate change-related risks and may not lawfully distribute misleading or false disclosures, the SEC’s current disclosure regime is not producing the transparency about such risks that investors need and are demanding to make well-informed investment decisions.
The coalition specifically suggests that the SEC require companies to make annual disclosures of their greenhouse gas emissions and any plans to address their emissions; analyze and disclose the potential impacts of climate change and climate change regulation; and disclose corporate governance and risk management as they pertain to climate change.
AG Healey has previously sought to protect Massachusetts investors from inadequate climate risk disclosures through enforcement of the Massachusetts Consumer Protection Act. In 2019, AG Healey sued ExxonMobil, alleging that the global oil company has been unlawfully 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. As noted in AG Healey’s amended complaint, filed last year, the COVID-19 pandemic provided a real-time illustration of how shocks to the economy, including sudden drops in fossil fuel demand, have potentially dire consequences for companies like ExxonMobil and their investors. The litigation is pending in Massachusetts Superior Court.
AG Healey joins the attorneys general of California, Connecticut, Delaware, Illinois, Maryland, Michigan, Minnesota, New York, Oregon, Vermont, and Wisconsin in sending today’s letter.
This matter is being handled for Massachusetts by Special Assistant Attorney General Lillian McCullough and Assistant Attorney General Margaret Sullivan, both of AG Healey’s Energy and Environment Bureau, with assistance from Assistant Attorneys General David Lim and Lilia DuBois, both of AG Healey’s Insurance and Financial Services Division.