,,ii #aafth ,,congress #ast ,session ,s4 #bjge ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,july #aj1 #bjai,ms4 ,warren 7for herself1 ,mr4 ,schatz1 ,mr4 ,whitehouse1 ,mr4 ,van ,hollen1 ,ms4 ,klobuchar1 ,mrs4 ,gillibrand1 ,mr4 ,bennet1 ,mr4 ,blumenthal1 ,mr4 ,booker1 ,mr4 ,markey1 ,mr4 ,merkley1 ,ms4 ,harris1 ,ms4 ,smith1 ,mrs4 ,feinstein1 ,mr4 ,schumer1 and ,mr4 ,carper7 introduced the following bill2 which was read twice and referred to the ,committee on ,banking1 ,housing1 and ,urban ,affairs ,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 terms appropriate climate principals1 climate change1 covered issuer1 physical risks1 and transition risks have the meanings given those terms in subsection 7s7 of section #ac of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghm71 as added by section #e2 7#b7 the term appropriate congressional committees means-- 7,a7 the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate2 and 7,b7 the ,committee on ,financial ,services of the ,house of ,representatives2 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 #a 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 ,act2 7#e7 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#f7 the term ,commission means the ,securities and ,exchange ,commission2 7#g7 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#h7 the term fossil fuel reserves means all producing assets1 proved reserves1 unproved resources1 and any other ownership stake in sources of fossil fuels2 7#i7 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#aj7 the term greenhouse gas emissions means the emissions of greenhouse gas1 expressed in terms of metric tons of carbon dioxide equivalent2 7#aa7 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#ab7 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 7#ac7 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 levels2 and 7#ad7 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 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 businesses in the ,united ,states 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,a71 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 risks described in clause 7i72 7,b7 detail any implications that the risks described in subparagraph 7,a77i7 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 7a7 ,in general ,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 7i72 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 the strategy of the covered issuer for addressing climate risks1 taking into account different climate scenarios2 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 that paragraph4 4 #f4 ,rulemaking 7a7 ,climate ,risk ,disclosure ,rules ,not later than #b years after the date of enactment of this ,act1 the ,commission1 in consultation with the appropriate climate principals1 shall issue rules with respect to the information that a covered issuer is required to disclose pursuant to subsection 7s7 of section #ac of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghm71 as added by section #e1 which shall-- 7#a7 establish1 in consultation with the appropriate climate principals1 climate-related risk disclosure guidance1 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 the 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 available1 including 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 #e-1 #aj-1 and #bj-year time frames2 and 7iii7 the 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 subsection 7s7 of section #ac of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghm71 as added by section #e-- 7,a7 incorporate into the disclosure-- 7i7 quantitative analysis to support any qualitative statement made by the covered issuer2 7ii7 the guidance 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 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 and 7vii7 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-- 7viii7 necessary2 7ix7 appropriate to safeguard the public interest2 or 7x7 directed at ensuring that investors are informed in accordance with the findings described in section #d2 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 and 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 reserves 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-- 7aa7 the frequency with which applicable assets of the covered issuer are observed for methane leaks2 7bb7 the processes and technology that the covered issuer uses to detect methane leaks2 7cc7 the percentage of assets of the covered issuer that the covered issuer inspects under that methodology2 and 7dd7 quantitative and time-bound reduction goals of the covered 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 and 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 and 7#c7 establish how and where the required disclosures shall be addressed in the annual financial filing of a covered issuer4 7b7 ,formatting ,the ,commission shall-- 7#a7 require covered issuers to disclose information in an interactive data format2 and 7#b7 develop standards for the format described in paragraph 7#a71 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 the rules further the findings described in section #d7b74 #g4 ,compilation of information disclosed ,the ,commission shall1 to the maximum extent practicable-- 7#a7 make a compilation of the information disclosed by issuers pursuant to subsection 7s7 of section #ac of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghm71 as added by section #e1 publicly available on the website of the ,commission2 and 7#b7 update the compilation described in paragraph 7#a7 not less frequently than once each year4 #h4 ,backstop ,if1 #b years after the date of enactment of this ,act1 the ,commission has not issued rules pursuant to section #f1 and until those rules are issued1 a covered issuer shall be deemed in compliance with subsection 7s7 of section #ac of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghm71 as added by section #e1 if disclosures set forth in the annual report of the covered issuer satisfy the recommendations of the ,task ,force on ,climate-related ,financial ,disclosures of the ,financial ,stability ,board as reported in ,june #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 subsection 7s7 of section #ac of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghm71 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 subsection 7s7 of section #ac of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghm71 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