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The Editors

Companies Need to Get Real About Climate Risk

The SEC’s plan to require disclosure makes sense, with some minor adjustments.



Photographer: Robyn Beck/AFP/Getty Images

For decades, US companies have been making a significant omission in their financial statements: They’ve failed to recognize and disclose the full cost of climate change. This matters not only for the planet’s future, but also for investors today. It makes some businesses look more profitable than they really are, and it prevents others from realizing the value of new and greener opportunities.

The Securities and Exchange Commission wants to address this by requiring better disclosure of climate-related costs and risks. With some minor adjustments, its proposal is an excellent idea.