Energy and Climate Change

In a global context marked by climate change and its increasingly visible effects, environmental regulations have evolved from a mere political concern into an urgent necessity for ensuring a sustainable future.

For years, experts and the media in the United States have emphasized the country’s critical role in the fight against climate change as one of the world’s largest economies. One of the most significant developments in this regard has been the introduction of new climate disclosure regulations by the U.S. Securities and Exchange Commission (SEC).

These new regulations aim to ensure transparency and accountability in how large corporations manage climate risks, directly affecting not only businesses but also ordinary citizens. Here’s how the SEC’s new rules, along with broader regulatory changes in the U.S., are influencing the daily lives of Americans, with a special focus on their implications for businesses, society, and the environment.

Climate Change and the Energy Crisis

The United States has been facing the devastating effects of climate change for decades. Extreme temperatures, wildfires, more intense hurricanes, and prolonged droughts are just some of the phenomena that have severely impacted the country. Climate change is also having long-term consequences for public health, agriculture, water access, and infrastructure. Given this reality, the need for changes in energy and environmental policies has become more urgent than ever.

The U.S. energy sector, one of the world’s largest greenhouse gas (GHG) emitters, has been a primary focus of attention. Non-renewable energy sources such as oil, natural gas, and coal have dominated for over a century, significantly contributing to the climate crisis. However, in recent years, the country has intensified efforts to reduce emissions by promoting a transition to renewable energy sources and implementing stricter regulations for businesses operating in this sector.

The SEC and the New Climate Disclosure Rules

The SEC’s new regulations, introduced in 2022, represent a significant step forward in the fight against climate change within the corporate world. They require publicly traded companies with revenues exceeding $700 million to disclose the climate risks they face and how they are managing these risks.

These measures aim to enhance transparency and help both investors and consumers make more informed decisions about the environmental impact of businesses.

Key Requirements of the New Regulations on Energy and Climate Change

Companies must now clearly and consistently disclose information about their greenhouse gas (GHG) emissions, including:

• Scope 1 emissions: Direct emissions from company-owned operations.
• Scope 2 emissions: Indirect emissions from electricity consumption.
• Scope 3 emissions: In some cases, indirect emissions from the company’s supply chain.

Additionally, companies must assess and disclose how physical climate risks (such as extreme weather events) and transitional risks (such as regulatory changes or shifts in demand for sustainable products) could affect their business models in the short and long term. They must also describe how climate risks are integrated into corporate governance, detailing the role of boards of directors and executives in overseeing these risks.

Finally, businesses are required to disclose the financial impacts of climate risks, including how these risks could affect their revenues, costs, and stock market value.

Impact of the New Rules on Energy and Climate Change on Businesses

The implementation of these new SEC disclosure rules has the potential to transform how companies operate in the U.S. By requiring corporations to report their carbon footprint, climate risks, and mitigation strategies, the regulations create a more transparent and accountable business environment.

For many companies, particularly those in high-emission industries, compliance will be a major challenge. Large corporations will need to invest in more sophisticated monitoring and emissions management systems and adapt to new corporate responsibility requirements. This means changes in production processes, the adoption of cleaner technologies, and the restructuring of supply chains to reduce indirect emissions.

However, the new regulations also present opportunities. Companies that successfully adapt to these rules—demonstrating a real commitment to sustainability and reducing their environmental footprint—could benefit from greater investment opportunities, an improved public reputation, and enhanced competitiveness in the global market.

Impact of Energy and Climate Change on Everyday Life

Although these new regulations are primarily designed for large corporations, their effects extend to ordinary citizens in the U.S. Greater transparency in climate information has the potential to influence daily life in several ways:

Greater Transparency and Accountability

Consumers will benefit from increased transparency regarding corporate emissions and climate risks. This will enable people to make more informed choices about the products and services they purchase, favoring companies that prioritize environmental responsibility. Products from businesses that adopt sustainable practices will likely become more attractive, accelerating the transition to a low-carbon economy.

Changes in Energy Costs

The shift toward cleaner energy sources and the adoption of more efficient technologies could have direct implications for consumer energy costs. While renewable energy sources such as solar and wind power still involve higher installation costs than traditional sources, their operational costs are generally lower. Over time, this could lead to reduced energy expenses for households and businesses.

Impact on Employment

The new regulations could trigger a transformation in the job market. Industries reliant on non-renewable energy sources, such as coal and oil, may experience job losses as the economy transitions toward cleaner energy alternatives. However, the renewable energy sector—including solar, wind, and energy efficiency technologies—could see a surge in job creation. This shift could mean more employment opportunities in sustainable industries.

Improved Public Health

By reducing greenhouse gas emissions, the new rules will also contribute to better air quality and reduced negative health effects. Carbon dioxide emissions, along with other pollutants like nitrogen oxides, are closely linked to respiratory diseases, cardiovascular issues, and other health problems.

Implications for the Future

The SEC’s new regulations are just one part of a much broader shift taking place across the U.S. While large corporations are required to comply with these regulations, the impact extends far beyond businesses, directly affecting the daily lives of American citizens.

The transition to a more sustainable economy, supported by stricter and more transparent environmental regulations, promises significant changes in key sectors such as energy, employment, health, and quality of life. In this sense, the SEC’s new rules, along with other developing climate policies, could serve as a model for other countries looking to address the climate crisis.