,,ib ,union ,calendar ,no4 #dfa #aafth ,,congress #b;d ,session ,h4 ,r4 #cfbc ,report ,no4 #aaf-efc1 ,part ,i ,,in ,,the ,,house ,,of ,,representatives ,july #e1 #bjai,mr4 ,casten of ,illinois 7for himself and ,mr4 ,cartwright7 introduced the following bill2 which was referred to the ,committee on ,financial ,services1 and in addition to the ,committee on ,energy and ,commerce1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,october #bg1 #bjbj;,additional sponsors3 ,mr4 ,mc,govern1 ,ms4 ,ocasio-,cortez1 ,ms4 ,velzquez1 ,ms4 ,dean1 ,mr4 ,san ,nicolas1 ,ms4 ,brownley of ,california1 ,mr4 ,soto1 ,mr4 ,lawson of ,florida1 ,mr4 ,neguse1 ,mr4 ,huffman1 ,ms4 ,pressley1 ,mr4 ,tonko1 ,mr4 ,foster1 ,ms4 ,barragn1 ,mr4 ,lowenthal1 ,mr4 ,grijalva1 ,mr4 ,cisneros1 ,ms4 ,wild1 ,ms4 ,judy ,chu of ,california1 ,mr4 ,levin of ,california1 ,ms4 ,bonamici1 ,ms4 ,eshoo1 ,mr4 ,de,saulnier1 ,mr4 ,ted ,lieu of ,california1 ,mr4 ,cleaver1 ,mr4 ,blumenauer1 ,mr4 ,rouda1 ,ms4 ,lofgren1 ,ms4 ,de,gette1 ,mrs4 ,napolitano1 ,mr4 ,kind1 ,mr4 ,garca of ,illinois1 ,mr4 ,gonzalez of ,texas1 and ,ms4 ,escobar ,october #bg1 #bjbj,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 #bg1 #bjbj;,committee on ,energy and ,commerce discharged2 committed to the ,committee of the ,whole ,house on the ,state of the ,union and ordered to be printed,for text of introduced bill1 see copy of bill as introduced on ,july #e1 #bjai ,a ,,bill ,to amend the ,securities ,exchange ,act of #aicd to require issuers to disclose certain activities relating to climate change1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,climate ,risk ,disclosure ,act of #bjai4 #b4 ,definitions ,in this ,act-- 7#a7 the term #a4e degree scenario means a widely recognized1 publicly available analysis scenario in which human interventions to combat global climate change are likely to prevent the global average temperature from reaching #a4e degrees ,celsius above pre-industrial levels2 7#b7 the terms appropriate climate principals1 climate change1 and appropriate congressional committees have the meanings given those terms in section #ac7s7 of the ,securities ,exchange ,act of #aicd2 7#c7 the term baseline scenario means a widely-recognized analysis scenario in which levels of greenhouse gas emissions1 as of the date on which the analysis is performed1 continue to grow1 resulting in-- 7,a7 an increase in the global average temperature of #a4e degrees ,celsius or more above pre-industrial levels2 and 7,b7 the realization of physical risks relating to global climate change2 7#d7 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 gas1 as determined under table ,a-#a of subpart ,a of part #ih of title #dj1 ,code of ,federal ,regulations1 as in effect on the date of enactment of this subsection2 7#e7 the term ,commission means the ,securities and ,exchange ,commission2 7#f7 the term commercial development of fossil fuels includes-- 7,a7 exploration1 extraction1 processing1 exporting1 transporting1 and any other significant action with respect to oil1 natural gas1 coal1 or any byproduct thereof2 and 7,b7 acquiring a license for any activity described in subparagraph 7,a72 7#g7 the term covered issuer has the meaning given the term in section #ac7s7 of the ,securities ,exchange ,act of #aicd2 7#h7 the term direct and indirect greenhouse gas emissions includes1 with respect to a covered issuer-- 7,a7 all direct greenhouse gas emissions released by the covered issuer2 7,b7 all indirect greenhouse gas emissions with respect to electricity1 heat1 or steam purchased by the covered issuer2 7,c7 significant indirect emissions1 other than the emissions described in subparagraph 7,b71 that occur in the value chain of the covered issuer2 and 7,d7 all indirect greenhouse gas emissions that are attributable to assets owned or managed1 including assets that are partially owned or managed1 by the covered issuer2 7#i7 the term fossil fuel reserves means all producing assets1 proved reserves1 unproved resources1 and any other ownership stake in sources of fossil fuels2 7#aj7 the term greenhouse gas-- 7,a7 means carbon dioxide1 hydrofluorocarbons1 methane1 nitrous oxide1 perfluorocarbons1 sulfur hexafluoride1 nitrogen triflouride1 and chlorofluorocarbons2 and 7,b7 includes any other anthropogenically-emitted gas or particulate that the ,administrator of the ,environmental ,protection ,agency determines1 after notice and comment1 to contribute to climate change2 7#aa7 the term greenhouse gas emissions means the emissions of greenhouse gas1 expressed in terms of metric tons of carbon dioxide equivalent2 7#ab7 the term physical risks has meaning given the term in section #ac7s7 of the ,securities ,exchange ,act of #aicd2 7#ac7 the term social cost of carbon means the monetized present value1 discounted at a #c percent or lower discount rate1 in dollars1 per metric ton of carbon dioxide 7or carbon dioxide equivalent71 of the net global costs over #cjj years caused by the emission of carbon dioxide 7or carbon dioxide equivalent1 as applicable7 that result from-- 7,a7 changes in net agricultural productivity2 7,b7 decreases in capital and labor productivity2 7,c7 effects on human health2 7,d7 property damage from increased sea level rise1 flooding1 wildfires1 and frequency and severity of extreme weather events2 7,e7 the value of ecosystem services2 and 7,f7 any other type of economic1 social1 political1 or natural disruption2 7#ad7 the term transition risks has meaning given the term in section #ac7s7 of the ,securities ,exchange ,act of #aicd4 7#ae7 the term value chain-- 7,a7 means the total lifecycle of a product or service1 both before and after production of the product or service1 as applicable2 and 7,b7 may include the sourcing of materials1 production1 and disposal with respect to the product or service described in subparagraph 7,a72 and 7#af7 the term well below #a4e degrees scenario means a widely-recognized1 publicly-available analysis scenario in which human interventions to combat global climate change are likely to prevent the global average temperature from reaching #a4e degrees ,celsius above pre-industrial levels4 #c4 ,sense of ,congress ,it is the sense of ,congress that-- 7#a7 climate change poses a significant and increasing threat to the growth and stability of the economy of the ,united ,states2 7#b7 many sectors of the economy of the ,united ,states and many ,american businesses are exposed to multiple channels of climate-related risk1 which may include exposure to-- 7,a7 the physical impacts of climate change1 including the rise of the average global temperature1 accelerating sea-level rise1 desertification1 ocean acidification1 intensification of storms1 increase in heavy precipitation1 more frequent and intense temperature extremes1 more severe droughts1 and longer wildfire seasons2 7,b7 the economic disruptions and security threats that result from the physical impacts described in subparagraph 7,a7 including conflicts over scarce resources1 conditions conducive to violent extremism1 the spread of infectious diseases1 and forced migration2 and 7,c7 the transition impacts that result as the global economy transitions to a clean and renewable energy1 low-emissions economy1 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 #a4e degrees ,celsius above pre-industrial levels2 7#c7 assessing the potential impact of climate-related risks on national and international financial systems is an urgent concern2 7#d7 companies have a duty to disclose financial risks that climate change presents to their investors1 lenders1 and insurers2 7#e7 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 futures2 7#f7 investors1 lenders1 and insurers are increasingly demanding climate risk information that is consistent1 comparable1 reliable1 and clear2 7#g7 including standardized1 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 markets2 7#h7 requiring companies to disclose climate-related risk exposure and risk management strategies will encourage a smoother transition to a clean and renewable energy1 low-emissions economy and guide capital allocation to mitigate1 and adapt to1 the effects of climate change and limit damages associated with climate-related events and disasters2 and 7#i7 a critical component in fighting climate change is a transparent accounting of the risks that climate change presents and the implications of continued inaction with respect to climate change4 #d4 ,findings ,congress finds that-- 7#a7 short-1 medium-1 and long-term financial and economic risks and opportunities relating to climate change1 and the national and global reduction of greenhouse gas emissions1 constitute information that issuers-- 7,a7 may reasonably expect to affect shareholder decision making2 and 7,b7 should regularly identify1 evaluate1 and disclose2 and 7#b7 the disclosure of information described in paragraph 7#a7 should-- 7,a7 identify1 and evaluate-- 7i7 material physical and transition risks posed by climate change2 and 7ii7 the potential financial impact of such risks2 7,b7 detail any implications such risks have on corporate strategy2 7,c7 detail any board-level oversight of material climate related risks and opportunities2 7,d7 allow for intra- and cross-industry comparison1 to the extent practicable1 of climate-related risk exposure through the inclusion of standardized industry-specific and sector-specific disclosure metrics1 as identified by the ,commission1 in consultation with the appropriate climate principals2 7,e7 allow for tracking of performance over time with respect to mitigating climate risk exposure2 and 7,f7 incorporate a price on greenhouse gas emissions in financial analyses that reflects1 at minimum1 the social cost of carbon that is attributable to issuers4 #e4 ,disclosures relating to climate change ,section #ac of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghm7 is amended by adding at the end the following3 7s7 ,disclosures relating to climate change 7#a7 ,definitions ,in this subsection-- 7,a7 the term appropriate climate principals means-- 7i7 the ,administrator of the ,environmental ,protection ,agency2 7ii7 the ,secretary of ,energy2 7iii7 the ,administrator of the ,national ,oceanic and ,atmospheric ,administration2 7iv7 the ,director of the ,office of ,management and ,budget2 and 7v7 the head of any other ,federal agency determined appropriate by the ,commission2 7,b7 the term climate change means a change of climate that is-- 7i7 attributed directly or indirectly to human activity that alters the composition of the global atmosphere2 and 7ii7 in addition to natural climate variability observed over comparable time periods2 7,c7 the term covered issuer means an issuer that is required to file an annual report under subsection 7a7 or section #ae7;d72 7,d7 the term physical risks means financial risks to long-lived fixed assets1 locations1 operations1 or value chains that result from exposure to physical climate-related effects1 including-- 7i7 increased average global temperatures and increased frequency of temperature extremes2 7ii7 increased severity and frequency of extreme weather events2 7iii7 increased flooding2 7iv7 sea level rise2 7v7 ocean acidification2 7vi7 increased frequency of wildfires2 7vii7 decreased arability of farmland2 7viii7 decreased availability of fresh water2 and 7ix7 any other financial risks to long-lived fixed assets1 locations1 operations1 or value chains determined appropriate by the ,commission1 in consultation with appropriate climate principals2 7,e7 the term transition risks means financial risks that are attributable to climate change mitigation and adaptation1 including efforts to reduce greenhouse gas emissions and strengthen resilience to the impacts of climate change1 including-- 7i7 costs relating to-- 7,i7 international treaties and agreements2 7,,ii7 ,federal1 ,state1 and local policy2 7,,iii7 new technologies2 7,,iv7 changing markets2 7,v7 reputational impacts relevant to changing consumer behavior2 and 7,,vi7 litigation2 and 7ii7 assets that may lose value or become stranded due to any of the costs described in subclauses 7,i7 through 7,,vi7 of clause 7i74 7#b7 ,disclosure ,each covered issuer1 in any annual report filed by the covered issuer under subsection 7a7 or section #ae7;d71 shall1 in accordance with any rules issued by the ,commission pursuant to the ,climate ,risk ,disclosure ,act of #bjai1 include in each such report information regarding-- 7,a7 the identification of1 the evaluation of potential financial impacts of1 and any risk-management strategies relating to-- 7i7 physical risks posed to the covered issuer by climate change2 and 7ii7 transition risks posed to the covered issuer by climate change2 7,b7 a description of any established corporate governance processes and structures to identify1 assess1 and manage climate-related risks2 7,c7 a description of specific actions that the covered issuer is taking to mitigate identified risks2 7,d7 a description of the resilience of any strategy the covered issuer has for addressing climate risks when differing climate scenarios are taken into consideration2 and 7,e7 a description of how climate risk is incorporated into the overall risk management strategy of the covered issuer4 7#c7 ,rule of construction ,nothing in paragraph 7#b7 may be construed as precluding a covered issuer from including1 in an annual report submitted under subsection 7a7 or section #ae7;d71 any information not explicitly referenced in such paragraph4 4 #f4 ,rulemaking 7a7 ,climate ,risk ,disclosure ,rules ,the ,commission1 in consultation with the appropriate climate principals1 shall not later than #b years after the date of the enactment of this ,act1 issue rules with respect to the information that a covered issuer is required to disclose pursuant to section #ac7s7 of the ,securities ,exchange ,act of #aicd and such rules shall-- 7#a7 establish1 in consultation with the appropriate climate principals1 climate-related risk disclosure rules1 which shall-- 7,a7 be1 to the extent practicable1 specialized for industries within specific sectors of the economy1 which shall include-- 7i7 the sectors of finance1 insurance1 transportation1 electric power1 mining1 and non-renewable energy2 and 7ii7 any other sector determined appropriate by the ,commission1 in consultation with the appropriate climate principals2 7,b7 include reporting standards for estimating and disclosing direct and indirect greenhouse gas emissions by a covered issuer1 and any affiliates of the covered issuer1 which shall-- 7i7 separate1 to the extent practicable1 total emissions of each specified greenhouse gas by the covered issuer2 and 7ii7 include greenhouse gas emissions by the covered issuer during the period covered by the disclosure2 7,c7 include reporting standards for disclosing1 with respect to a covered issuer-- 7i7 the total amount of fossil fuel-related assets owned or managed by the covered issuer2 and 7ii7 the percentage of fossil fuel-related assets as a percentage of total assets owned or managed by the covered issuer2 7,d7 establish a minimum social cost of carbon1 which-- 7i7 shall be considered a minimum price with respect to costs associated with carbon emissions2 7ii7 a covered issuer shall use in preparing climate-related disclosure statements2 and 7iii7 the ,commission shall make publicly available all assumptions and methods used in the calculations2 7,e7 not preclude a covered issuer from using and disclosing1 as compared with the price established under subparagraph 7,d71 a higher price of greenhouse gas emissions2 7,f7 specify requirements for1 and the disclosure of1 input parameters1 assumptions1 and analytical choices to be used in climate scenario analyses required under paragraph 7#b77;,a71 including-- 7i7 present value discount rates2 7ii7 time frames to consider1 including #e1 #aj1 and #bj year time frames2 and 7iii7 minimum pricing of greenhouse gas emissions1 as established under subparagraph 7,d7 and subject to subparagraph 7,e72 and 7,g7 include1 after consultation with the ,administrator of the ,environmental ,protection ,agency1 the ,secretary of ,energy1 the ,secretary of the ,interior1 the ,secretary of ,agriculture1 the ,secretary of ,transportation1 the ,chair of the ,council on ,environmental ,quality1 and the ,director of the ,office of ,science and ,technology ,policy documentation standards and guidance with respect to the information required under paragraph 7#b77;,c72 7#b7 require that a covered issuer1 with respect to a disclosure required under section #ac7s7 of the ,securities ,exchange ,act of #aicd-- 7,a7 incorporate into such disclosure-- 7i7 quantitative analysis to support any qualitative statement made by the covered issuer2 7ii7 the rules established under paragraph 7#a72 7iii7 industry-specific metrics that comply with the requirements under paragraph 7#a77;,a72 7iv7 specific risk management actions that the covered issuer is taking to address identified risks2 7v7 a discussion of the short-1 medium-1 and long-term resilience of any risk management strategy1 and the evolution of applicable risk metrics1 of the covered issuer under each scenario described in paragraph 7#a77;,b72 and 7vi7 the total cost of carbon attributable to the direct and indirect greenhouse gas emissions of the covered issuer1 using1 at minimum1 the social cost of carbon2 7,b7 consider1 when preparing any qualitative or quantitative risk analysis statement contained in the disclosure-- 7i7 a baseline scenario that includes physical impacts of climate change2 7ii7 a well below #a4e degrees scenario2 and 7iii7 any additional climate analysis scenario considered appropriate by the ,commission1 in consultation with the appropriate climate principals2 7,c7 if the covered issuer engages in the commercial development of fossil fuels1 include in the disclosure-- 7i7 an estimate of the total and a disaggregated amount of direct and indirect greenhouse gas emissions of the covered issuer that are attributable to-- 7,i7 combustion2 7,,ii7 flared hydrocarbons2 7,,iii7 process emissions2 7,,iv7 directly vented emissions2 7,v7 fugitive emissions or leaks2 and 7,,vi7 land use changes2 7ii7 a description of-- 7,i7 the sensitivity of fossil fuel reserve levels to future price projection scenarios that incorporate the social cost of carbon into hydrocarbon pricing2 7,,ii7 the percentage of the reserves of the covered issuer that will be developed under the scenarios established in subparagraph 7,b71 as well as a forecast for the development prospects of each reserve under the scenarios established in subparagraph 7,b72 7,,iii7 the potential amount of direct and indirect greenhouse gas emissions that are embedded in proved and probable hydrocarbon reserves1 with each such calculation presented as a total and in subdivided categories by the type of reserve2 7,,iv7 the methodology of the covered issuer for detecting and mitigating fugitive methane emissions1 which shall include the frequency with which applicable assets of the covered issuer are observed for methane leaks1 the processes and technology that the covered issuer uses to detect methane leaks1 the percentage of assets of the covered issuer that the covered issuer inspects under that methodology1 and quantitative and time-bound reduction goals of the issuer with respect to methane leaks2 7,v7 the amount of water that the covered issuer withdraws from freshwater sources for use and consumption in operations of the covered issuer2 and 7,,vi7 the percentage of the water described in subclause 7,v7 that comes from regions of water stress or that face wastewater management challenges2 and 7iii7 any other information that the ,commission1 in consultation with the appropriate climate principals and the ,administrator of the ,environmental ,protection ,agency1 the ,secretary of ,energy1 the ,secretary of the ,interior1 the ,secretary of ,agriculture determines is-- 7,i7 necessary2 7,,ii7 appropriate to safeguard the public interest2 or 7,,iii7 directed at ensuring that investors are informed in accordance with the findings described in section #d2 7#c7 with respect to a disclosure required under section #ac7s7 of the ,securities ,exchange ,act of #aicd1 require that a covered issuer include in such disclosure any other information1 or use any climate-related or greenhouse gas emissions metric1 that the ,commission1 in consultation with the appropriate climate principals1 determines is-- 7,a7 necessary2 7,b7 appropriate to safeguard the public interest2 or 7,c7 directed at ensuring that investors are informed in accordance with the findings described in section #d2 and 7#d7 with respect to a disclosure required under section #ac7s7 of the ,securities ,exchange ,act of #aicd1 establish how and where the required disclosures shall be addressed in the covered issuer's annual financial filing4 7b7 ,formatting ,the ,commission shall require issuers to disclose information in an interactive data format and shall develop standards for such format1 which shall include electronic tags for information that the ,commission determines is-- 7#a7 necessary2 7#b7 appropriate to safeguard the public interest2 or 7#c7 directed at ensuring that investors are informed in accordance with the findings described in section #d4 7c7 ,periodic update of rules ,the ,commission shall periodically update the rules issued under this section to ensure that such rules further the findings in section #d7b74 #g4 ,compilation of information disclosed ,the ,commission shall1 to the maximum extent practicable make a compilation of the information disclosed by issuers pursuant to section #ac7s7 of the ,securities ,exchange ,act of #aicd publicly available on the website of the ,commission and update such compilation at least once each year4 #h4 ,backstop ,if1 #b years after the date of the enactment of this ,act1 the ,commission has not issued rules pursuant to section #f1 and until such rules are issued1 a covered issuer shall be deemed in compliance with section #ac7s7 of the ,securities ,exchange ,act of #aicd 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 ,june1 #bjag1 or any successor report1 and as supplemented or adjusted by such rules1 guidance1 or other comments from the ,commission4 #i4 ,reports 7a7 ,securities and ,exchange ,commission ,the ,commission shall-- 7#a7 conduct an annual assessment regarding the compliance of covered issuers with the requirements of section #ac7s7 of the ,securities ,exchange ,act of #aicd1 as added by section #e2 7#b7 submit to the appropriate congressional committees a report that contains the results of each assessment conducted under paragraph 7#a72 and 7#c7 make each report submitted under paragraph 7#b7 accessible to the public4 7b7 ,government ,accountability ,office ,the ,comptroller ,general of the ,united ,states shall periodically evaluate1 and report to the appropriate congressional committees on1 the effectiveness of the ,commission in carrying out and enforcing section #ac7s7 of the ,securities ,exchange ,act of #aicd1 as added by section #e4 #aj4 ,severability ,if any provision of this ,act1 an amendment made by this ,act1 or the application of this ,act 7or an amendment made by this ,act7 to any person or circumstance is held to be invalid1 that holding shall have no effect with respect to-- 7#a7 the remainder of this ,act2 and 7#b7 the application of the provision or amendment1 as applicable1 to any other person or circumstance4 #aa4 ,authorization of appropriations ,there are authorized to be appropriated to the ,commission such sums as may be necessary to carry out this ,act4 ,october #bg1 #bjbj,reported from the ,committee on ,financial ,services with an amendment,october #bg1 #bjbj;,committee on ,energy and ,commerce discharged2 committed to the ,committee of the ,whole ,house on the ,state of the ,union and ordered to be printed