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New York State Comptroller DiNapoli and California Controller Yee Urge S.E.C. to Mandate Climate Change Disclosures

June 10, 2021

In an op-ed on, New York State Comptroller Thomas P. DiNapoli and California State Controller Betty T. Yee today called on the Securities and Exchange Commission to require corporations disclose the risks that climate change poses to their operations. The full op-ed is below:

America Needs Climate Disclosure to Protect Its Economy

By Betty T. Yee and Thomas P. DiNapoli

It is undeniable that climate change is an emergency that endangers not just our environment, but the American economy.

According to the National Bureau of Economic Research, climate change may negatively impact everything from farming to manufacturing and reduce the U.S. GDP by 10 percent this century. Scientists and economists agree that climate change poses a systemic risk to the economy and could disrupt asset valuations, global financial markets, and global economic stability.

As the chief financial officers of two of the largest state economies, and representatives of the nation’s largest public pension funds, we believe it is essential to address the financial impacts that climate change could pose to the economies, retirement systems and residents of our respective states.

If you question whether this is truly an emergency, look no further than our two states. In recent years, America has seen the most active and most damaging wildfire and hurricane seasons. Last year’s wildfire season in California was the worst on record and burned over 4 million acres— double the 2018 record, leading to $150 billion in damages. In New York, we are still dealing with the impacts of Superstorm Sandy, which killed 44 people and caused an enormous storm surge that forced thousands from their homes, resulting in an estimated $19 billion in destruction and lost economic activity.

In 2020, overall damages related to extreme weather in the U.S. totaled $95 billion, nearly double the amount in 2019. Expectations are that the impact of these events will only get worse.

We are encouraged by the Biden Administration’s “whole-of-government” approach to climate change, which includes initiatives to protect our national economy from the impacts and shocks of climate change. This includes action by the U.S. Securities and Exchange Commission (SEC) to mandate corporations disclose the risks they face from climate change.

Addressing a systemic financial risk like climate change is vital to efficient securities markets. The private sector is increasingly aware of the urgent need for climate risk disclosure. For example, a 2019 survey of 215 of the world's 500 largest companies found nearly $1 trillion in reported climate-related financial risk. And the Sustainability Accounting Standards Board’s research shows that investors consider the nature of the risk faced by companies to be so significant that they identified climate change as being material for 72 out of 79 industry sectors.

As part of the letter issued in early June— coordinated by the sustainability nonprofit, Ceres— we call on the SEC to require all corporations to disclose their climate risks on at least an annual basis. It is a goal that is publicly supported by many corporations, including Apple, HP, Uber, Salesforce, 16 State Treasurers, and investors representing over $41 trillion in assets under management.

Investors need material climate disclosures to make informed investment decisions, but for too long, our securities rules have led to incomplete and incomparable climate information, which is insufficient for protecting investors’ assets.

We believe the SEC should adopt climate disclosure rules and metrics that are based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which has been endorsed by thousands of global companies and investors. These disclosures should be industry-specific; provide insights into companies’ climate risk exposure, strategies, and scenario planning; and include Scope 1, 2, and 3 emissions, which are needed to assess the full range of climate change risks facing companies. Moreover, the SEC should update disclosure rules regularly as climate impacts, and the scientific consensus around them, evolve.

This emergency requires leaders to rise up and meet the unprecedented challenges posed by the scope, scale, and impacts of climate change. As statewide elected officials and trustees of our pension funds, we are taking bold steps to protect our residents, our economies and our investments from the financial impacts of climate change, and we are grateful for the leadership that President Biden is showing on the national level.

Now it is time for the SEC to follow the Biden's lead, to respond to the needs of investors, and to protect our economy by requiring material, comprehensive and comparable climate disclosures.

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