Attorney General Bonta Leads Coalition in Support of SEC Proposal to Require U.S. Companies to Disclose Financial Risk from Climate Change

OAKLAND – California Attorney General Rob Bonta today led a coalition of 20 attorneys general in support of the Securities and Exchange Commission's (SEC) proposal to require U.S. companies to provide accurate and detailed information about the financial risk they 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 in California is causing ongoing losses in agricultural revenue. These impacts will only worsen in the coming years. Mandatory climate change-related disclosures are essential to guard U.S. and global financial systems against systemic risk associated with climate change and to protect investors, including the many ordinary Americans whose retirement savings are investment-based.

“Climate change is already costing the U.S. economy hundreds of billions of dollars each year, and that figure is only set to grow,” said Attorney General Bonta. “Whether a company takes seriously its financial exposure to climate change may have a serious impact on the value of that company. I urge the SEC to finalize its proposal to require companies across industries to provide accurate, detailed information about their climate change-related risks. This information is critical for investors to make smart decisions about where they are putting their money.” 

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. As these events increase in intensity and frequency, their impacts on companies will only grow. Already, the average cost per year of climate disasters has increased from an average cost of $19.5 billion per year in the 1980s to $89.2 billion per year in the 2010s. In 2021, the cost to the U.S. economy rose to a whopping $148 billion. This does not include indirect costs from climate change, such as short-term and long-term healthcare costs resulting from wildfire smoke inhalation.

These economic impacts pose serious concerns for the more than 50% of U.S. households with money invested in the stock market, including retirement savings, college funds, and other life savings. Last year, Americans held $7.3 trillion in 401(k) plans and $13.2 trillion in IRAs. The majority of Americans over the age of 65 receive some sort of income from pension funds, and California alone has $336 billion invested in pensions for the state’s teachers, firefighters, and other public servants. These investors need information about corporations’ exposure to climate-related financial risk to make smart investment decisions, yet only 20% of North American companies currently make any climate-related disclosures.

In today’s letter, the coalition expresses its strong support for the SEC’s proposed rule, which will ensure that investors receive specific, comparable information about companies’ climate-related financial risks. The SEC’s decision to require climate change-related disclosures from all industries and companies of all sizes aligns with the coalition’s comments last year highlighting that no company or industry is immune to financial risk or impacts from climate change. Requiring corporate disclosure of financial risk will also provide an effective counter to greenwashing – false claims by a company that its policies are environmentally-sustainable. The proposed rule is well-within the SEC’s statutory authority and should be finalized immediately.

Attorney General Bonta is joined by the attorneys general of Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Vermont, Washington, and Wisconsin in filing the letter.

A copy of the letter is available here.