What the SEC Climate Rule Means for Adaptation and Resilience

  • The US Securities and Exchange Commission (SEC) published its long-awaited climate risk disclosure rule for public companies yesterday (March 6)
  • The rule mandates disclosure of the material impact of physical climate risks on the companies’ strategies, business models, and outlooks
  • This information should drive investor appreciation of the value of adaptation and resilience (A&R) investment and stimulate A&R innovation
  • However, caveats and limitations in the rule may limit the usefulness of the physical risk data produced
  • Mandatory expenditure metrics shine a light on the costs of climate shocks, but not on the costs of building resilience

“Emilie Mazzacurati, co-founder of Tailwind Climate, says this means adaptation issues have to be referenced in the context of policy, market, and similar risk disclosures. “That’s a very important departure from the TCFD’s [Task Force on Climate-related Financial Disclosures]  precedent, which opens much more widely the scope of disclosures by including not just direct physical risks (whether on operations or supply chain) but also adaptation risk in a much broader sense. Changes to zoning law, to water rights, shifts in commodity prices or market conditions indirectly due to climate impacts will now need to be assessed and reported. This is a critical development to widen the lens of how corporations think about adaptation risk,” she says.”

Read the full story on ClimateProof.