House Committee considers the Climate Risk Disclosure Act

Yahoo Finance’s Jessica Smith joins the Yahoo Finance Live panel with her interview with Rep. Sean Casten (D) Illinois to discuss how the House Committee is considering the Climate Risk Disclosure Act .

Video Transcript

AKIKO FUJITA: A House Committee is considering a bill to require public companies to report more information about their climate risks. Our very own Jessica Smith speaking to one lawmaker who is leading the charge on that front. And Jess, there's been so much attention on what the FCC is likely to do. What specifically is Congress considering on this front?

JESSICA SMITH: Well, Congressman Sean Casten and Senator Elizabeth Warren are working on this. And as we speak right now, the House Financial Services Committee is considering this bill. And what it would do is direct the FCC within two years to issue rules to require every public company to disclose direct and indirect greenhouse gas emissions, total amount of fossil fuel related assets it owns or manages, how the company's valuation would be affected if climate change continues at its current rate or if policymakers are able to restrict emissions, and finally, risk management strategies related to physical risk and transmission risk posed by climate change.

Now I did speak with Congressman Casten this morning. And he says that it's important for companies to have clear, consistent standards of what they need to report. There has been some pushback, some concern about how complicated it might be for some public companies to figure out all of their climate risk. Casten really pushed back on that idea. He says having clear rules of the road is going to help that make it more doable. And supporters say this move would allow investors to make better decisions, more informed decisions, and ultimately, it could speed up the transition from fossil fuels to more sustainable energy. Here's Congressman Casten.

SEAN CASTEN: We need to make sure that our private sector understands when they are investing in a way that complicates that risk, and therefore, is going to reduce their long-term return, and when they're investing in a way that will hedge that risk or maybe even eliminate it. So it's about making sure that we harness the full power of the private sector to address this massive existential threat, both to the ecology of our planet and to the stability of our financial system.

JESSICA SMITH: The Congressman said he is confident this bill is going to make it out of committee. We'll see if it does just in the next few minutes. And then we'll see what happens in the full House. As for the bill on the Senate side, that is going to be more difficult to build Republican support. But we'll keep an eye on this one. Akiko.

AKIKO FUJITA: Jess, you hit on a concern we've heard from a lot of companies, which is that there's no real guidelines right now in terms of how to report the risks, what is considered a risk, what is considered net zero. I mean, the list is pretty long when it comes to sort of laying out what the concern should be from the shareholder side. How much of that is actually laid out in this bill and how much of that do you think is ultimately up to the SEC?

JESSICA SMITH: Well, I laid out some of the proposals that are in this bill, what measures they would want these companies to report, and then, of course, the SEC would have some involvement in that as well. And we know the SEC is moving on this on its own. And I did talk to Congressman Casten about that. Seeing as the SEC is already moving on this, they've asked for public input. Those answers are due next month.

And he said that when they first introduced this bill under the Trump administration, they were trying to compel the SEC to act. But now that the SEC is acting, he says he still wants to pass legislation because he wants to have the strength of law behind these actions. So they don't have to worry about these requirements changing if someone new takes over in the White House.

ZACK GUZMAN: All right, Jessica Smith bringing us the latest there. Appreciate that.

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