Climate change poses great physical, transitional, and legal risks to the capital market. Current U.S. Securities and Exchange Commission (SEC) disclosures do not adequately consider market exposure to such climate risk, especially in the long-term. The SEC's latest analysis of how climate-related disclosures fit into the agency's existing disclosure regulations, found in its 2010 Guidance Document, is outdated given developments in regulations, market conditions, and climate science. Moreover, SEC registrants have discretion over reporting climate-related information to the agency, and generally avoid fully disclosing such information. As capital market participants become increasingly aware of climate risks, however, they are increasingly asking SEC registrants to disclose climate-related information and the SEC to provide greater guidance and specific SEC regulation on climate matters. The SEC's recent March 2022 Proposed Rule suggests the SEC will soon take action to reduce registrants' discretion over climate-related disclosures by creating a specific duty for publicly held companies to disclose climate-related matters aligned with broadly accepted climate disclosure frameworks. This will give the SEC power to enforce climate-related disclosures and will provide market participants with more consistent, comparable, and reliable climate-related information to help them make informed investment and business decisions. This Note argues that the SEC is the appropriate agency to take such action. It suggests that either the SEC already has the implied authority to promulgate such disclosure rules, or Congress may soon give it this authority explicitly. This Note argues that the SEC should both update its 2010 Guidance Document and should adopt a final version of its March 2022 Proposed Rule. Ultimately, the SEC has a responsibility, or at least the opportunity, to help address the systemic and catastrophic risks of climate change to the capital market. The SEC should act accordingly.
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