US markets are just seven days away from catching a glimpse of the climate change disclosures under development at the Securities and Exchange Commission (SEC).

The watchdog will meet on Monday next week with the purpose of publicly thrashing out its reporting proposals against a background of much dissent, internal debate and political impatience.

At stake is how fast, and to what degree, the US catches up with other advanced economies as they push for ever greater climate disclosure as part of efforts to beat global warming.

A brief statement issued by the regulator says: “The Commission will consider whether to propose amendments that would enhance and standardise registrants’ climate-related disclosures for investors.”

The US is currently well behind. In the UK companies are expected to meet the demands of guidelines set by the Task Force on Climate-related Financial Disclosures (TCFD) and begin publishing their transition plans next year. One proxy adviser, ISS, has said it will even vote against board chairs if their companies are judged to have fallen short on minimum standards for “detailed disclosure” of climate-related risks. The UK has also made commitments to adopt new International Sustainability Standards launched at the COP26 gathering in Glasgow last year.

In Brussels the European Commission is pushing ahead with a project to introduce a new human rights and sustainability reporting directive while work is also under way on a Corporate Sustainability Reporting Directive to update existing non-financial reporting rules.

In the US, efforts to bring about climate reporting came about only after the election of Joe Biden as president at the beginning of 2021. Three months later the SEC invited comment on whether the US should embrace mandatory climate disclosures. Of 550 letters in response, three-quarters are reported to have been in support, including those from some of the country’s largest companies.

‘Consistency and comparability’

In a speech last July Gary Gensler, the SEC’s freshly appointed chair, said mandatory disclosures offer investors “consistency and comparability”. “When disclosures remain voluntary,” Gensler added, “it can lead to a wide range of inconsistent disclosures.”

He said he had asked staff to create disclosures that were “decision useful” and in “sufficient detail so investors can gain helpful information” and include qualitative and quantitative data.

In the speech he namechecked the TCFD and said staff had been encouraged to be “inspired” by its work, though he also indicated the US would pursue reporting rules “appropriate” to US markets.

However, reports have emerged that divisions have opened up inside the SEC over key issues, with SEC members diverging on how much information disclosures should demand and whether they should be audited or covered by some other form of assurance. A Bloomberg article suggests there are concerns that overly aggressive disclosure rules could be overturned in court by business representatives.

Some politicians have grown impatient with progress. In February senator Elizabeth Warren wrote to Gensler insisting delays in going live with new rules were “not acceptable”.

“The lack of a rule,” Warren wrote, “means that shareholders and investors are left in the dark about the significant long and short-term climate risks facing public companies, including supply chain disruptions, infrastructure risks, costs from storms, sea-level rise and weather-related crop or equipment failure, a economic or national security instability.”

She added that internal arguments, or having staff “litigate against themselves” could result in “watered down” proposals.

Next week will be a big moment for the SEC. Its climate disclosure proposals will have to please progressive campaigners and but also avoid any weakness that could see them overturned in US courts. It is a difficult balancing act. But the biggest risk is the US falling behind other nations and leaving the world without a unified voice on the role of business in tackling the climate emergency. The SEC is playing for high stakes.