Bloomberg Law
July 28, 2021, 2:30 PMUpdated: July 28, 2021, 4:29 PM

SEC Mulls Climate Change Risks in 10-Ks Over Amazon Objections (1)

Andrew Ramonas
Andrew Ramonas
Corporate Disclosure Reporter

The SEC’s proposal for new rules on mandatory climate change disclosures could require companies to put in their annual reports information on greenhouse gas emissions and plans for managing risks, the agency’s chair said.

The Securities and Exchange Commission is looking at mandated quantitative reporting that also includes financial impacts of climate change and progress towards climate goals, SEC Chair Gary Gensler said in his remarks Wednesday at a United Nations-backed Principles for Responsible Investment event.

Some qualitative disclosures under consideration would cover how executives manage climate risks and opportunities, and how climate change factors into a company’s business strategy, he said.

“A decision-useful disclosure has sufficient detail so investors can gain information — it’s not simply generic text,” he said.

The agency first announced last month its plans to craft climate risk disclosure rules by October. More details released Wednesday, including plans to possibly mandate 10-K disclosures, could subject companies to more legal liability for inaccurate reporting.

The chairman’s comments came after Inc., Alphabet Inc., and other companies raised concerns with the SEC that reporting missteps could lead to shareholder litigation and other legal troubles. The agency should allow companies to make climate disclosures outside of 10-Ks and in other publicly available documents that carry less legal liability, they said.

Mandated quantitative reporting could include companies’ Scope 1 and 2 emissions, referring to emissions from their operations and their use of electricity and other resources, he said. It also may include Scope 3 emissions, which come from companies’ supply chains, he said.

The SEC is examining reporting standards from the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures and other groups as it crafts its proposal, Gensler said. (Michael Bloomberg, founder of Bloomberg LP, is the chairman of the TCFD. Bloomberg Law is operated by entities controlled by Michael Bloomberg.)

But the agency isn’t planning to rely on outside standard setters to create climate disclosure requirements, Gensler said.

The SEC has received more than 550 unique comment letters on climate disclosure mandates, with about 75% of the letters urging the agency to create rules, Gensler said.

“Companies and investors alike would benefit from clear rules of the road,” Gensler said. “I believe the SEC should step in when there’s this level of demand for information relevant to investors’ decisions. “

(Updates with additional background throughout)

To contact the reporter on this story: Andrew Ramonas in Washington at

To contact the editors responsible for this story: Michael Ferullo at; Roger Yu at