| | | | |  | | By Jordan Wolman | Presented by Rio Tinto Kennecott | | | | | |  SEC Chair Gary Gensler faces a rocky road on climate disclosure. | Andrew Caballero-Reynolds/Getty Images | GOING GLOBAL — The world’s standard-bearer for financial regulation could be relegated to playing passenger when it comes to corporate climate disclosure, Jordan and Declan Harty report. As the U.S. Securities and Exchange Commission continues to deliberate over how to finalize a rule initially proposed more than 20 months ago, jurisdictions from Brussels to Sacramento are moving faster and farther with their own measures. For some, SEC Chair Gary Gensler’s cautious approach in trying to deliver a rule that can withstand the legal challenges that it is virtually certain to attract is posing a significant risk to its standing among regulators. “The SEC could go from being a leader to a laggard, potentially ceding the leadership role,” former SEC Acting Chair Allison Herren Lee said in an interview. “If they catch up quickly and finalize a strong rule that is interoperable with the others, then they’ll be fine. But being behind on this, especially if they drop important elements in the proposal that others have adopted, that will create problems for both global and domestic firms.” The SEC still matters a lot given the size and importance of U.S. capital markets. But concern is growing around how the agency’s standards will align with the rest of the world and whether it will streamline the burden on thousands of companies by enabling them to file similar disclosures across jurisdictions. “Of course [the SEC is] respected, they're well regarded,” said Aleksandra Palinska, executive director of the European Sustainable Investment Forum who served on the board that drafted Europe’s climate disclosure rules. “But because the ambition on tackling and mitigating climate change is not really seen a priority there in terms of sustainability-related disclosures, the SEC is not really seen as a reference point.” It was always going to be tough sledding for the agency on this issue even before it faced the prospect of having to align with international and domestic measures. Sharp criticism and legal threats from business groups and conservative politicians have been coming since the initial proposal was released. And the SEC’s approach differs fundamentally from efforts in other jurisdictions in that its stated goal is to bring uniformity and comparability in disclosures for investors, while others are expressly focused on fighting climate change. “Everybody's cognizant of what's going on with the SEC in terms of the constraints that they have to deal with,” said Sonja Gibbs, the head of sustainable finance at the Institute of International Finance. “There's a lot of respect for what the SEC is trying to do.” An SEC rule that meshes with other standards could help head off a potential frenzy of interest in copycat laws across the U.S. from states inspired by California’s success. Both supporters and opponents of the SEC’s rule agree that a patchwork of climate disclosure rules is something that no one wants to see. “For the SEC to allow an environment in which climate disclosures proceed on a state-by-state basis could be disastrous. If the states took over this area, it would be an untenable situation for companies,” Lee said. “It’s earthquake-level significance, what happened with California.”
| | | | A message from Rio Tinto Kennecott: This year, Rio Tinto Kennecott celebrates 120 years of American jobs, American copper, and American progress. We’re dedicated to producing critical minerals for America’s clean energy transition, while providing strong paying union jobs. To us, it’s not just copper, it’s a strong America. It’s what keeps our homes warm, lights on, and powers the technology we use every day. 120 years proud and more to come. Learn More. | | | | | NOT HUNKY-DORY — A sweeping new government report paints a grim picture of the high costs the U.S. will bear due to climate change, Zack Colman reports. Low-income populations, the elderly and children will suffer the most from the threats posed across society, from the economy to human health and infrastructure. It’s the most detailed report to date on the climate risks exacerbated by the world’s hottest year on record. And the findings are galvanizing efforts to decarbonize the economy and reach the Biden administration’s net-zero goals. Administration officials and scientists who worked on the report said every fraction of a degree of warming that is prevented could help stem disruptions. “The takeaway from this assessment, the takeaway from all of our collective work on climate, should not be doom and despair,” said National Climate Adviser Ali Zaidi. “The takeaway … should be a sense of hope and possibilities.” Still, planet-warming emissions are projected to increase 9 percent by the end of the decade under countries’ current climate plans, a slower rate of increase than last year but a grim finding nonetheless as international climate talks are set to start in two weeks, Sara Schonhardt of POLITICO’s E&E News reports. CLIMATE HOGS — “Superuser” states are monopolizing federal money geared for climate-resilience projects, Thomas Frank of POLITICO’s E&E News reports. California, Florida, New York, Washington and North Carolina have together received $2 billion, or half of the money allocated through the Federal Emergency Management Agency program since 2021. The three-year-old program has become a national showcase for expansive projects meant to protect communities against the strengthening impacts of disasters such as floods and wildfires. By contrast, 24 smaller states have altogether been awarded less than 5 percent of the program funding. Mississippi, West Virginia and New Mexico haven’t sought any of the federal grants. “There’s more funding than there’s ever been before, but it’s not enough for all the adaptation and resilience work that must occur for us to be ready for the next 60 or 80 years,” said Victoria Salinas, FEMA associate administrator for resilience.
| | RGGI-RAMA — Two key swing states are leaving a regional carbon pricing program twisting in the wind as they weigh tough political choices over their own participation, Jordan reports. Virginia Democrats may be better positioned to fight Republican Gov. Glenn Youngkin’s plan to leave the Regional Greenhouse Gas Initiative after winning control of the Legislature in last week’s elections. And Pennsylvania Democratic Gov. Josh Shapiro faces a potentially explosive decision over whether to appeal a court ruling that barred the state’s participation in the group. Politicians in both states must balance the competing labor, environmental and energy interests around the issue without alienating the important groups. And it marks a critical juncture for RGGI, a group of Northeast and mid-Atlantic states that hasn’t meaningfully expanded in a lasting way since 2007 — constraining its ability to further reduce greenhouse gas emissions. The conflicts highlight the limits of state-driven climate policies — and the political punching bag RGGI has become, especially in fossil-fuel reliant states like Pennsylvania. Shapiro will have less than 30 days to make his appeal decision. Meanwhile, Virginia Democrats could try to force Youngkin’s hand by putting RGGI in the next budget.
| | | | A message from Rio Tinto Kennecott:   | | | | | BRUSSELS BLESSING — The European Union will make a “substantial” financial pledge toward a new fund for climate damages, Zia Weise reports. EU Climate Commissioner Wopke Hoekstra is “ready to announce a substantial financial contribution by the bloc and its member states to the loss and damage fund” during COP28, according to a joint statement he issued with COP28 President-designate Sultan al-Jaber. The announcement could raise pressure on the U.S. and other developed nations to follow suit. U.S. climate envoy John Kerry said Friday he was “confident” Washington would contribute, though the Biden administration has struggled to get financing for international climate efforts through Congress.
| | | | A new report on flood risk from insurance giant Chubb shows a staggering level of misunderstanding and false sense of security on the part of large corporations. The report released today surveyed 332 brokers with clients of various sizes in industries ranging from aerospace to agriculture. About 4 in 10 are located inland compared with 28 percent based in coastal areas. Chubb found that:
- Some 56 percent of brokers say their clients don’t buy flood insurance because they rely on commercial property insurance, which excludes flood coverage.
- Sixty-nine percent of brokers said fewer than half of their clients appreciate that flooding is the most common and most expensive natural disaster. Brokers said 45 percent of clients don’t even ask for a flood insurance quote.
- The Midwest was where brokers were most likely to indicate that 50 percent or more of their clients buy flood insurance. Even there, only 23 percent of brokers said clients were at or above that level.
- In every region, the gap between companies that have purchased flood insurance and those that need it is stark but is greatest in the South.
“When a business owner sees flooding on the news, because it's someone else's issue, there's a false sense of security,” Louis Hobson, Chubb’s senior vice president of flood insurance for North America, said in an interview. “We as an industry have to do a much better job of making flooding and flood insurance part of the daily conversation that happens between carriers, brokers and property owners to remind them of the risks that exist.”
| | GAME ON — Welcome to the Long Game, where we tell you about the latest on efforts to shape our future. Join us every Tuesday as we keep you in the loop on the world of sustainability. Team Sustainability is editor Greg Mott and reporters Jordan Wolman and Allison Prang. Reach us all at gmott@politico.com, jwolman@politico.com and aprang@politico.com. Sign up for the Long Game. It's free!
| | | | A message from Rio Tinto Kennecott: For 120 years, Rio Tinto’s Kennecott mine has been supplying America with the copper it needs to live our everyday lives. Currently, Kennecott produces 12% of the annual domestic copper demand. As the U.S. advances our clean energy transition, we know copper is critical to the technologies needed to reach our energy policy goals. From semiconductors, solar panels, wind turbines, to electric vehicles, the demand for copper is predicted to double by 2035.
As we plan for the next 120 years, Rio Tinto is investing billions more in American metals and mineral security across the U.S. to continue shaping our clean energy future. See How. | | | | | — Struggles in the wind energy sector may not be good for the green transition, but they’ve been great for hedge funds, the Financial Times reports. — A startup that has received support from Bill Gates is touting a carbon storage method that involves making bricks from plant matter. The Washington Post explains. — Automakers are stepping up efforts to build electric vehicles without using rare-earth minerals from China, according to Reuters. | | | | Follow us on Twitter | | | | Follow us | | | | |
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