The Biden administration is considering ways to push the global finance industry to consistently account for carbon dioxide emissions and green investments, according to people familiar with the matter.
The Treasury Department and U.S. regulators are in the early stages of working on measures to improve companies’ environmental impact disclosure, according to the people, who spoke on condition of anonymity because the discussions are private. The moves seek to address carbon leakage—where producers move to regions with less restrictive pollution rules—and climate-related metrics for Environmental, Social and Governance-based investing, the people said.
Part of the effort would include recommendations being crafted by the U.S. Securities and Exchange Commission for companies to report their environmental impact, according to one person.
The intent is to boost demand for assets that tackle climate change, while preventing companies from making claims that could be considered “greenwashing,” or overstating the significance of emissions reductions and sustainability efforts, the people said. They asked not to be identified because Treasury’s discussions are not public.
There are already several industry-driven initiatives to establish a set of rules for green finance. But experts warn that without strong oversight the industry could settle on looser standards that allow firms to continue supporting carbon-intensive activities while using cheap offsets to claim they’re doing what’s needed to slow global warming.
The U.S. government looks forward to exchanging views with the European Union on a coming carbon border adjustment plan, set to be made public in June, according to an emailed statement from the State Department.
The Biden administration’s work with global partners on climate change “will include exploring and developing market and regulatory approaches to address greenhouse gas emissions in the global trading system,” the State Department said. “As appropriate, and consistent with domestic approaches to reduce U.S. greenhouse gas emissions, this includes consideration of carbon border adjustments.”
A Treasury spokesperson declined to comment. An SEC spokesperson didn’t immediately respond to a request for comment.
The SEC announced Monday that it would solicit public comment on potential changes to policies governing climate disclosure, including whether it should set different standards for various industries and whether investors should have a say in what specific corporations have to reveal.
Gary Gensler, Biden’s nominee to lead the SEC, who’s currently awaiting Senate confirmation, would be responsible for implementing any changes to companies’ disclosure requirements.