The SEC’s proposal to mandate climate risk disclosure is one step closer to approval after all but one commissioner, Trump-appointed Hester Peirce, supported the measure in a meeting on Monday. The rules, requiring companies to disclose climate risks that could hinder operations and emissions associated with the manufacturing and use of their products, could change the way Americans shop and invest.

Why This Matters

The 2017 Carbon Majors Report found that just 100 companies were responsible for 71% of emissions, underscoring the importance of holding corporations accountable for their climate impacts and to their climate commitments. Until now, corporate greenwashing and opaqueness have made it challenging for consumers and investors to pressure companies to reduce their carbon footprint. Mandated disclosures, though, could offer concerned consumers new leverage.

Some companies already taking steps to decarbonize are eager for greater transparency. Executive vice president of Delta Air Lines, Peter Carter, expressed support for standardizing disclosure rules, saying it would “allow companies to simplify climate change disclosure.” But not every corporation is so thrilled. Oil and gas providers that cling to old business models, and fail to achieve climate pledges, have been resistant to the possibility of new rules.

Applying Pressure

It’s too soon to tell whether the SEC’s new rules will be enough. The SEC’s move has come “very late in the game,” according to Daniel Firger of Great Circle Capital Advisors. “Climate risks are proliferating, and investors are still mostly in the dark when it comes to companies' strategic, governance and operational approaches to climate and the energy transition." Still, Firger adds that it's “better late than never.”

Overall, the US is late when it comes to establishing these rules. European companies have long been required to disclose sustainability matters to investors. As Axios notes, the SEC’s new rules would make corporate emissions more transparent, which means activists could apply more pressure on companies. Time, though, is running out. Emissions have just hit their highest levels ever and experts suspect that the amount of methane released into the atmosphere has been underestimated.