The words "climate change" trigger vigorous debate. Many Americans view alterations to global climate as an existential threat to our planet and demand immediate implementation of mitigation and adaptation measures with potential far-reaching consequences to our economy. Yet others treat climate change as if it were a hoax, an exaggerated prediction from scientists with an allegedly political agenda, or an international problem over which our nation can have scant influence. These competing views complicate financial disclosure regulation because imposing climate-related disclosure obligations on public companies may necessitate acknowledging that climate risks are real and amenable to evaluation.

In a proposed rule released on March 21 for public comment, Enhancement and Standardization of Climate-Related Disclosures for Investors, the Securities and Exchange Commission (SEC) set forth detailed requirements for disclosure of climate-related information in registrations and reports filed with the commission. The three Democrat SEC commissioners approved the proposed rule over the fervent opposition of the sole Republican commissioner. The SEC explained that its proposed rule would protect investors by providing consistent, comparable and reliable information useful for evaluating the impact of climate-related risks on current and potential investments.