House Democrats on the Energy and Committee (E&C) introduced sweeping climate legislation on Tuesday, March 2 to transform the country’s energy mix. The $565 billion package sets goals to achieve net-zero emissions by 2050 and reduce emissions 50 percent below 2005 levels by 2030.
The Biden administration’s Interagency Working Group on the Social Cost of Greenhouse Gases (the “Working Group”) took its first step to update the costs to society from carbon dioxide, methane and nitrous oxide pollution. Federal agencies use social costs to inform cost-benefit analyses and justify rulemakings and other executive action, such as decisions over leasing public lands for fossil fuel development and production.
Many investors and other stakeholders have long sought universal requirements for public companies to disclose the social and climate impacts of their operations. If recent developments at the United States Securities and Exchange Commission (SEC)—such as the nomination of Gary Gensler to chair the SEC, the creation of a new Climate and Environmental, Social and Governance (ESG) Senior Policy Advisor position and yesterday’s announcement that the Commission will update its 2010 guidance on climate disclosure—are any indication, the proposal of such requirements appears imminent. Not to be outdone, a group of California legislators may beat the federal government to it by introducing what could become the first mandatory climate disclosure requirements in the U.S.
On February 24, 2021, Acting Securities and Exchange Commission (SEC) Chair Allison Herren Lee issued a statement directing the Division of Corporation Finance to “enhance its focus on climate-related disclosure in public company filings.” Accordingly, Acting Chair Lee announced that, after completing a review of public companies’ efforts and compliance in regards to the SEC’s 2010 interpretative guidance to public companies regarding existing SEC disclosure requirements as they apply to climate change matters (2010 guidance), the SEC staff will update the 2010 guidance to reflect developments in the past decade. The staff’s review will include engagement with public companies and absorption of “critical lessons on how the market is currently managing climate-related risks.” She closed her statement by noting that, “[n]ow more than ever, investors are considering climate-related issues when making their investment decisions” and that ensuring compliance with current rules and updating existing guidelines are steps the SEC can take to produce “consistent, comparable, and reliable climate-related disclosures.”
The Biden administration has continued its efforts to reverse the previous administration’s approach to climate change, this time relating to the National Environmental Policy Act (NEPA), which requires reviews of large infrastructure projects. First, the White House’s Council on Environmental Quality (CEQ) announced it is rescinding its “Draft National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions,” issued in June 2019 but never finalized. Second, the Department of Justice (DOJ) asked the U.S. District Court for the Western District of Virginia to pause proceedings in a lawsuit challenging CEQ’s July 2020 revisions to NEPA’s implementing regulations, which the court denied. Both moves follow from President Biden’s Day One Executive Order entitled “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis,” which instructed federal agencies to review and consider rescinding all environmental rules promulgated under the previous administration.
In keeping with its stated emphasis on sustainability twinned with board effectiveness to generate long-term gains, BlackRock Investment Stewardship recently announced updates to its proxy voting guidelines. State Street Global Advisors is also expected its policies on racial and ethnic diversity and climate risk disclosures.
In Part 2 of our international climate diplomacy series, we explore the history of U.S.-China climate diplomacy and assess both countries’ current climate pledges. We examine the Biden administration’s stance toward China and discuss potential paths for rebuilding the bilateral relationship. We conclude our analysis by presenting significant diplomatic considerations if the U.S. is to use climate change as a diplomatic tool going forward.
President Biden began his administration’s push for sustainable infrastructure with his Executive Order on Tackling the Climate Crisis at Home and Abroad. It sets forth a government-wide approach, including a mandate federal agencies to direct more funding to clean energy infrastructure opportunities and to submit climate action plans to a newly-formed climate task force.