HR-3623-116
Placed on the Union Calendar, Calendar No. 461.
Sponsored by Sean Casten (D-IL)
What it does
This bill would direct the Securities and Exchange Commission (SEC) to require publicly traded companies to annually disclose climate change-related risks to their business. Companies would be required to report their direct and indirect greenhouse gas emissions, disclose assets tied to fossil fuels, and follow standards based on the social cost of carbon.
Who benefits
Investors and shareholders who would gain standardized information to assess climate-related financial risks in their portfolios. Pension fund managers and retirement account holders who rely on accurate risk disclosures to protect long-term savings. Competing companies that already voluntarily disclose climate risks, who would no longer face a disadvantage. Communities and researchers who would gain access to standardized emissions data across industries.
Who is hurt
Publicly traded companies — particularly those in fossil fuel, energy, manufacturing, and agriculture sectors — that would face new compliance costs to measure, verify, and report emissions data. Smaller publicly traded companies with fewer resources to absorb compliance and reporting burdens. Companies with significant fossil fuel assets whose valuations could be negatively affected by mandatory public disclosure of those holdings. Shareholders of those companies if disclosure leads to reduced valuations or divestment pressure.
Supporters argue
Supporters argue that investors currently lack consistent, reliable information about how climate change could affect the financial health of companies they own. Without mandatory standards, companies disclose climate risks selectively or not at all, leaving investors — including millions of Americans with retirement accounts — exposed to hidden financial risks. Standardized disclosure would level the playing field, allowing markets to price climate risk accurately and efficiently. Supporters also contend that the SEC has long required disclosure of material risks to investors, and climate-related financial exposure meets that standard. They argue this bill simply extends an established principle of securities law to a category of risk that has grown too large to ignore.
Opponents argue
Opponents argue that the bill would impose significant and costly new compliance burdens on publicly traded companies, particularly smaller firms that lack the staff and infrastructure to measure and report complex emissions data. They contend that the SEC's existing materiality standard already requires companies to disclose risks that are financially significant, making a separate mandate unnecessary and duplicative. Opponents also argue that mandating disclosure of a "social cost of carbon" standard involves contested policy judgments that go beyond the SEC's traditional investor-protection mission, effectively using securities law to advance energy policy goals. They further argue that under West Virginia v. EPA and Loper Bright v. Raimondo, such a broad regulatory mandate would require explicit congressional authorization and could not be delegated to the SEC without clear statutory guidance.
Constitutional context
The bill operates under Congress's authority to regulate interstate commerce (Commerce Clause, Art. I §8) and to create agencies with delegated rulemaking authority (Necessary and Proper Clause). The SEC's authority to mandate disclosures is grounded in the Securities Exchange Act of 1934. Key constitutional tensions arise from the major questions doctrine (West Virginia v. EPA, 2022), which requires clear congressional authorization for agency rules of vast economic and political significance. Post-Loper Bright (2024), courts would independently review whether the SEC's interpretation of its statutory authority covers climate-specific mandates, without deferring to the agency. The social cost of carbon standard could also face nondelegation challenges if Congress does not provide an intelligible principle guiding the SEC's rulemaking.
Checks and balances
This bill would expand executive branch authority by directing the SEC — an independent regulatory agency — to create and enforce new mandatory disclosure rules for all publicly traded companies. Congress would set the policy mandate, but the SEC would hold broad rulemaking discretion to define emissions measurement standards and the social cost of carbon framework. Judicial review of those rules would be more searching post-Loper Bright, shifting some interpretive authority back to the courts. State securities regulators would retain their existing authority but would likely defer to the federal framework for covered issuers.
Historical precedent
The SEC's 2010 guidance on climate change disclosure (SEC Release No. 33-9106) previously directed companies to disclose material climate-related risks under existing rules, but did not mandate specific emissions reporting. The EU's Non-Financial Reporting Directive (2014) and Corporate Sustainability Reporting Directive (2022) represent international precedents for mandatory climate disclosure regimes. The SEC proposed its own mandatory climate disclosure rule in 2022, which faced legal challenges under the major questions doctrine.