The ESG Initiative at the Wharton School
In California and Europe, a new dawn for corporate climate disclosure
Outlet: The Hill
The Securities and Exchange Commission (SEC) is expected to finalize a new rule this month to cover required corporate climate disclosures by public-reporting companies. But the bigger news is that California Gov. Gavin Newsom (D) has announced that he will soon sign into law two climate change disclosure bills passed by the state Legislature.
The new disclosure regime will help reduce rampant greenwashing by firms that claim, for example, that they are committed to climate targets — such as “net zero” by 2050 — but then do little to act on these pledges.
The new climate laws mark a sea-change in climate regulation, because they include the disclosure of the greenhouse gas emissions both upstream and downstream of the company itself — that is, from its suppliers and customers.
The new dawn of a corporate climate disclosure regime with legal teeth gives reason for hope that business firms will be incentivized to find more climate solutions the world needs in time to avoid the worst outcomes.