The Green Sheet: The Fed and SEC plant seeds for better corporate climate reporting

Climate-change stress… is getting financial. Risks related to climate change could affect global markets in a big way, and US officials are taking note. Last week, the Fed moved closer to launching climate-risk safety checkups. And the SEC is trying to amp up rules for corporate climate reporting. The disclosures could change company valuations, and how investors view entire industries. The details:

• Climate checkup: The Fed wants to require Big Banks to tally climate risks — aka how much $$ is threatened by intensifying wildfires and floods.
• Climate filings: The SEC wants public companies to share how climate change could affect their business (think: fossil-fueled lawsuits), demand for carbon-heavy products, and what they’re spending to stay compliant.
• Targets: The SEC might also make companies share five-year plans for cutting emissions, plus net-zero goals.

Late to the climate rally… The US is playing catch-up with countries like England and France, which have already set corporate climate-reporting standards. Meanwhile, companies have been making their own rules:

• Neutralize: Tech giants like Amazon and Microsoft made plans to go carbon-neutral. Google says it’s been carbon-neutral since 2007.
• Transition: Oil companies Exxon, Shell, and BP have made multibillion-dollar plans to shift to renewable energy.
• Clean-vest: Investment firms like BlackRock have prioritized renewables to de-risk funds.

Green filter... About 90% of S&P 500 companies share voluntary climate reports. But they’re usually not regulated, and sometimes “greenwashed” to inflate progress:

• Facts: Most Fortune 500 companies have emissions targets, but only 20% are based on science.
• Dally: Amazon committed to carbon neutrality by 2040 in 2019, but its emissions have actually grown 15%+ annually since.
• Lip service: Companies like Costco have said they want to reduce their footprints, but haven’t set formal targets yet.