- Office of Attorney General Maura Healey
Media Contact for AG Healey Supports SEC Proposal Requiring Companies to Disclose Financial Risks of Climate Change
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.
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.