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H.R. 3623: Climate Risk Disclosure Act of 2019

Should publicly traded companies be required to publicly reveal their business risks related to the climate crisis?


The Securities and Exchange Commission requires public companies to disclose “material risks” to the public and investors, but what qualifies as material risks is up to each individual company itself. As a result, what’s disclosed varies widely, even among companies in the same industry.

In particular, as the climate crisis has gotten consistently worse — with perpetually rising temperatures and accordingly disastrous weather and temperature extremes — many public companies have not been revealing climate-related risks as “material risks.”

What the legislation does

The Climate Risk Disclosure Act would require American public companies to disclose several climate-related risks to the Securities and Exchange Commission, and thus to shareholders and the public, including:

  • The cumulative amount of fossil-fuel assets they own.
  • The company’s greenhouse gas emissions total.
  • How their estimated value would differ if climate change continues unabated, versus if climate change is slowed to the goal set by the Paris climate accords.

The House version was introduced on July 5 as bill number H.R. 3623, by Rep. Sean Casten (D-IL6). The Senate version was introduced a few days later on July 10 as bill number S. 2075, by Sen. Elizabeth Warren (D-MA).

What supporters say

Supporters argue the bill is not only better for the environment, but actually better for business as well by putting America on the cutting edge of a green economy.

“The climate crisis presents an existential threat to all life on Earth. We need bold, comprehensive climate action. Public corporations must take responsibility for the large financial risks posed by the impacts of climate change, while embracing the economic opportunity of being global leaders in developing a clean energy economy,” Rep. Casten said in a press release. “Our bill utilizes market mechanisms to incentivize climate action by ensuring that corporations disclose the risks posed by climate action to the benefit of their shareholders and the public.”

“It’s time to wake up and fight back against giant corporations that want to pollute our environment and ask taxpayers to clean up the mess,” Sen. Warren said in the same press release. “[The bill would] give investors, and the American public, the power to hold corporations accountable for their role in the climate crisis.”

What opponents say

Opponents counter that too much disclosure can increase costs and scare off potential investors, which harms the economy at large.

“Market participants who do support additional sustainability disclosure requirements do not themselves uniformly recommend additional disclosure on the same sustainability issues,” William Hinman, the Securities and Exchange Commission’s Director of the Division of Corporation Finance, said in a March speech.

“As we approach this or other disclosure topics, I am always cognizant that imposing specific bright-line requirements can increase the costs associated with being a public company and yet not deliver the relevant and material information that market participants are seeking,” Hinman continued. “Adding requirements to the disclosure regime that do not deliver benefits that justify their costs decreases the attractiveness of our public markets, which in turn can reduce the number of public investment options available to all investors.”

Odds of passage

The House version has attracted 23 cosponsors, all Democrats. It awaits a potential vote in either the House Energy and Commerce or the House Financial Services Committee.

The Senate version has attracted 16 cosponsors, all Democrats. It awaits a potential vote in the Senate Banking, Housing, and Urban Affairs Committee. Passage is unlikely in the Republican controlled chamber.

A previous Senate version introduced in 2018 never received a vote.

Last updated Aug 27, 2019. View all GovTrack summaries.

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Oct 27, 2020.

Climate Risk Disclosure Act of 2019

This bill directs the Securities and Exchange Commission (SEC) to require an issuer of securities to annually disclose information regarding climate change-related risks posed to the issuer, including an issuer's strategies and actions to mitigate these risks.

Among other things, issuers must (1) report their direct and indirect greenhouse-gas emissions, (2) disclose their fossil fuel-related assets, and (3) establish standards regarding the social cost of carbon.