Union Calendar No. 461
116th CONGRESS 2d Session |
[Report No. 116–563, Part I]
To amend the Securities Exchange Act of 1934 to require issuers to disclose certain activities relating to climate change, and for other purposes.
July 5, 2019
Mr. Casten of Illinois (for himself and Mr. Cartwright) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
October 27, 2020
Additional sponsors: Mr. McGovern, Ms. Ocasio-Cortez, Ms. Velázquez, Ms. Dean, Mr. San Nicolas, Ms. Brownley of California, Mr. Soto, Mr. Lawson of Florida, Mr. Neguse, Mr. Huffman, Ms. Pressley, Mr. Tonko, Mr. Foster, Ms. Barragán, Mr. Lowenthal, Mr. Grijalva, Mr. Cisneros, Ms. Wild, Ms. Judy Chu of California, Mr. Levin of California, Ms. Bonamici, Ms. Eshoo, Mr. DeSaulnier, Mr. Ted Lieu of California, Mr. Cleaver, Mr. Blumenauer, Mr. Rouda, Ms. Lofgren, Ms. DeGette, Mrs. Napolitano, Mr. Kind, Mr. García of Illinois, Mr. Gonzalez of Texas, and Ms. Escobar
October 27, 2020
Reported from the Committee on Financial Services with an amendment
[Strike out all after the enacting clause and insert the part printed in italic]
October 27, 2020
Committee on Energy and Commerce discharged; committed to the Committee of the Whole House on the State of the Union and ordered to be printed
[For text of introduced bill, see copy of bill as introduced on July 5, 2019]
To amend the Securities Exchange Act of 1934 to require issuers to disclose certain activities relating to climate change, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
In this Act—
(1) the term “1.5 degree scenario” means a widely recognized, publicly available analysis scenario in which human interventions to combat global climate change are likely to prevent the global average temperature from reaching 1.5 degrees Celsius above pre-industrial levels;
(2) the terms “appropriate climate principals”, “climate change”, and “appropriate congressional committees” have the meanings given those terms in section 13(s) of the Securities Exchange Act of 1934;
(3) the term “baseline scenario” means a widely-recognized analysis scenario in which levels of greenhouse gas emissions, as of the date on which the analysis is performed, continue to grow, resulting in—
(4) the term “carbon dioxide equivalent” means the number of metric tons of carbon dioxide emissions with the same global warming potential as one metric ton of another greenhouse gas, as determined under table A-1 of subpart A of part 98 of title 40, Code of Federal Regulations, as in effect on the date of enactment of this subsection;
(6) the term “commercial development of fossil fuels” includes—
(7) the term “covered issuer” has the meaning given the term in section 13(s) of the Securities Exchange Act of 1934;
(8) the term “direct and indirect greenhouse gas emissions” includes, with respect to a covered issuer—
(B) all indirect greenhouse gas emissions with respect to electricity, heat, or steam purchased by the covered issuer;
(9) the term “fossil fuel reserves” means all producing assets, proved reserves, unproved resources, and any other ownership stake in sources of fossil fuels;
(10) the term “greenhouse gas”—
(11) the term “greenhouse gas emissions” means the emissions of greenhouse gas, expressed in terms of metric tons of carbon dioxide equivalent;
(12) the term “physical risks” has meaning given the term in section 13(s) of the Securities Exchange Act of 1934;
(13) the term “social cost of carbon” means the monetized present value, discounted at a 3 percent or lower discount rate, in dollars, per metric ton of carbon dioxide (or carbon dioxide equivalent), of the net global costs over 300 years caused by the emission of carbon dioxide (or carbon dioxide equivalent, as applicable) that result from—
(14) the term “transition risks” has meaning given the term in section 13(s) of the Securities Exchange Act of 1934.
It is the sense of Congress that—
(1) climate change poses a significant and increasing threat to the growth and stability of the economy of the United States;
(2) many sectors of the economy of the United States and many American businesses are exposed to multiple channels of climate-related risk, which may include exposure to—
(A) the physical impacts of climate change, including the rise of the average global temperature, accelerating sea-level rise, desertification, ocean acidification, intensification of storms, increase in heavy precipitation, more frequent and intense temperature extremes, more severe droughts, and longer wildfire seasons;
(B) the economic disruptions and security threats that result from the physical impacts described in subparagraph (A) including conflicts over scarce resources, conditions conducive to violent extremism, the spread of infectious diseases, and forced migration; and
(C) the transition impacts that result as the global economy transitions to a clean and renewable energy, low-emissions economy, including financial impacts as fossil fuel assets risk becoming stranded and it becomes uneconomic for companies to develop fossil fuel assets as policymakers act to limit the worst impacts of climate change by keeping the rise in average global temperature to 1.5 degrees Celsius above pre-industrial levels;
(3) assessing the potential impact of climate-related risks on national and international financial systems is an urgent concern;
(4) companies have a duty to disclose financial risks that climate change presents to their investors, lenders, and insurers;
(5) the Commission has a duty to promote a risk-informed securities market that is worthy of the trust of the public as families invest for their futures;
(6) investors, lenders, and insurers are increasingly demanding climate risk information that is consistent, comparable, reliable, and clear;
(7) including standardized, material climate change risk and opportunity disclosure that is useful for decision makers in annual reports to the Commission will increase transparency with respect to risk accumulation and exposure in financial markets;
(8) requiring companies to disclose climate-related risk exposure and risk management strategies will encourage a smoother transition to a clean and renewable energy, low-emissions economy and guide capital allocation to mitigate, and adapt to, the effects of climate change and limit damages associated with climate-related events and disasters; and
Congress finds that—
(1) short-, medium-, and long-term financial and economic risks and opportunities relating to climate change, and the national and global reduction of greenhouse gas emissions, constitute information that issuers—
(2) the disclosure of information described in paragraph (1) should—
(D) allow for intra- and cross-industry comparison, to the extent practicable, of climate-related risk exposure through the inclusion of standardized industry-specific and sector-specific disclosure metrics, as identified by the Commission, in consultation with the appropriate climate principals;
SEC. 5. Disclosures relating to climate change.
Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended by adding at the end the following:
“(s) Disclosures relating to climate change.—
“(1) DEFINITIONS.—In this subsection—
“(B) the term ‘climate change’ means a change of climate that is—
“(C) the term ‘covered issuer’ means an issuer that is required to file an annual report under subsection (a) or section 15(d);
“(D) the term ‘physical risks’ means financial risks to long-lived fixed assets, locations, operations, or value chains that result from exposure to physical climate-related effects, including—
“(2) DISCLOSURE.—Each covered issuer, in any annual report filed by the covered issuer under subsection (a) or section 15(d), shall, in accordance with any rules issued by the Commission pursuant to the Climate Risk Disclosure Act of 2019, include in each such report information regarding—
“(A) the identification of, the evaluation of potential financial impacts of, and any risk-management strategies relating to—
“(B) a description of any established corporate governance processes and structures to identify, assess, and manage climate-related risks;
“(C) a description of specific actions that the covered issuer is taking to mitigate identified risks;
(a) Climate Risk Disclosure Rules.—The Commission, in consultation with the appropriate climate principals, shall not later than 2 years after the date of the enactment of this Act, issue rules with respect to the information that a covered issuer is required to disclose pursuant to section 13(s) of the Securities Exchange Act of 1934 and such rules shall—
(1) establish, in consultation with the appropriate climate principals, climate-related risk disclosure rules, which shall—
(A) be, to the extent practicable, specialized for industries within specific sectors of the economy, which shall include—
(B) include reporting standards for estimating and disclosing direct and indirect greenhouse gas emissions by a covered issuer, and any affiliates of the covered issuer, which shall—
(E) not preclude a covered issuer from using and disclosing, as compared with the price established under subparagraph (D), a higher price of greenhouse gas emissions;
(F) specify requirements for, and the disclosure of, input parameters, assumptions, and analytical choices to be used in climate scenario analyses required under paragraph (2)(A), including—
(G) include, after consultation with the Administrator of the Environmental Protection Agency, the Secretary of Energy, the Secretary of the Interior, the Secretary of Agriculture, the Secretary of Transportation, the Chair of the Council on Environmental Quality, and the Director of the Office of Science and Technology Policy documentation standards and guidance with respect to the information required under paragraph (2)(C);
(2) require that a covered issuer, with respect to a disclosure required under section 13(s) of the Securities Exchange Act of 1934—
(A) incorporate into such disclosure—
(iv) specific risk management actions that the covered issuer is taking to address identified risks;
(B) consider, when preparing any qualitative or quantitative risk analysis statement contained in the disclosure—
(C) if the covered issuer engages in the commercial development of fossil fuels, include in the disclosure—
(i) an estimate of the total and a disaggregated amount of direct and indirect greenhouse gas emissions of the covered issuer that are attributable to—
(ii) a description of—
(I) the sensitivity of fossil fuel reserve levels to future price projection scenarios that incorporate the social cost of carbon into hydrocarbon pricing;
(II) the percentage of the reserves of the covered issuer that will be developed under the scenarios established in subparagraph (B), as well as a forecast for the development prospects of each reserve under the scenarios established in subparagraph (B);
(III) the potential amount of direct and indirect greenhouse gas emissions that are embedded in proved and probable hydrocarbon reserves, with each such calculation presented as a total and in subdivided categories by the type of reserve;
(IV) the methodology of the covered issuer for detecting and mitigating fugitive methane emissions, which shall include the frequency with which applicable assets of the covered issuer are observed for methane leaks, the processes and technology that the covered issuer uses to detect methane leaks, the percentage of assets of the covered issuer that the covered issuer inspects under that methodology, and quantitative and time-bound reduction goals of the issuer with respect to methane leaks;
(3) with respect to a disclosure required under section 13(s) of the Securities Exchange Act of 1934, require that a covered issuer include in such disclosure any other information, or use any climate-related or greenhouse gas emissions metric, that the Commission, in consultation with the appropriate climate principals, determines is—
SEC. 7. Compilation of information disclosed.
The Commission shall, to the maximum extent practicable make a compilation of the information disclosed by issuers pursuant to section 13(s) of the Securities Exchange Act of 1934 publicly available on the website of the Commission and update such compilation at least once each year.
If, 2 years after the date of the enactment of this Act, the Commission has not issued rules pursuant to section 6, and until such rules are issued, a covered issuer shall be deemed in compliance with section 13(s) of the Securities Exchange Act of 1934 if disclosures set forth in the annual report of such issuer satisfy the recommendations of the Task Force on Climate-related Financial Disclosures of the Financial Stability Board as reported in June, 2017, or any successor report, and as supplemented or adjusted by such rules, guidance, or other comments from the Commission.
(a) Securities and Exchange Commission.—The Commission shall—
(1) conduct an annual assessment regarding the compliance of covered issuers with the requirements of section 13(s) of the Securities Exchange Act of 1934, as added by section 5;
(b) Government Accountability Office.—The Comptroller General of the United States shall periodically evaluate, and report to the appropriate congressional committees on, the effectiveness of the Commission in carrying out and enforcing section 13(s) of the Securities Exchange Act of 1934, as added by section 5.
If any provision of this Act, an amendment made by this Act, or the application of this Act (or an amendment made by this Act) to any person or circumstance is held to be invalid, that holding shall have no effect with respect to—
SEC. 11. Authorization of appropriations.
There are authorized to be appropriated to the Commission such sums as may be necessary to carry out this Act.
Union Calendar No. 461 | |||||
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[Report No. 116–563, Part I] | |||||
A BILL | |||||
To amend the Securities Exchange Act of 1934 to require issuers to disclose certain activities relating to climate change, and for other purposes. | |||||
October 27, 2020 | |||||
Reported from the Committee on Financial Services with an amendment | |||||
October 27, 2020 | |||||
Committee on Energy and Commerce discharged; committed to the Committee of the Whole House on the State of the Union and ordered to be printed |