US chemical industry group backs flexible climate disclosures

A major US chemical industry group says it will back a March 21 federal plan that would require publicly traded companies to disclose climate-related risks—if the plan offers flexibility to businesses.

Under two related proposals, publicly traded companies would have to enumerate their greenhouse gas emissions and spell out the risks their operations face from climate change as part of their public filings with the US Securities and Exchange Commission (SEC). “Because climate-related risks can have an impact on public companies’ financial performance or position, it may be material to investors in making investment or voting decisions,” Renee Jones, director of the SEC division of corporation finance, said about the proposals at a March 21 public meeting.

The American Chemistry Council (ACC), the largest trade association for the US chemical industry, backs disclosure of such information if it is tailored to a company’s particular situation.

“Companies should focus on the disclosures that are most relevant to their investors and material to their businesses,” Chris Jahn, ACC president and CEO, says in a statement. “An effective climate disclosure program must strike the right balance among investor protection, the production of decision-useful information, and cost burden to companies.”

Jahn envisions a system in which “companies would report information on climate risks and opportunities where such information is relevant, material, and useful to their investors.” He adds, “Such flexibility would help avoid ineffective ‘one-size-fits-all’ standards, recognize differences across companies and industries, and make reports easier to read.”

The SEC proposals, however, suggest the commission could take a different path.

They would require climate-related disclosures of “greater consistency and comparability across companies” than current, voluntary guidelines, SEC chief economist Jessica Wachter said at the public meeting. “As more companies disclose how measures of climate risk affect their business operations, investors would gain a better understanding of how these same climate risks may affect business operations of similar firms.”

Wachter added, “By giving investors access to information, these proposals promote more efficient pricing of securities, more effective monitoring of management, and greater efficiency and capital allocation.”

At the meeting, the commission approved the proposals in a 3–1 vote. The SEC is accepting public comment on them and will likely revise them before finalizing them.

An ACC spokesperson tells C&EN that the industry group will study the SEC proposals before making specific comments on them.