Regulated US companies will be required to disclose climate-related metrics in financial reports under new rules proposed by the Securities and Exchange Commission (SEC).

The proposals, if passed, would require companies to report climate-related information if it is “reasonably likely to have a material impact on their business”, the SEC said in a statement published March 21.

Metrics would include Scope 1 and 2 greenhouse gas emissions, and Scope 3 where applicable. Scopes 1, 2 and 3 relate to direct, indirect, and upstream or downstream emissions, and are increasingly being used by regulatory bodies around the world to measure the impact of pollution.

SEC chair Gary Gensler said the proposed rules were driven by a significant level of demand from investors for “consistent, comparable, and decision-useful information” to aid investment decisions. He said the proposals would also provide “consistent and clear reporting obligations for issuers”.

“Our core bargain from the 1930s is that investors get to decide which risks to take, as long as public companies provide full and fair disclosure and are truthful in those disclosures,” Gensler continued.

“Today, investors representing literally tens of trillions of dollars support climate-related disclosures because they recognize that climate risks can pose significant financial risks to companies, and investors need reliable information about climate risks to make informed investment decisions.”

The new rules would help disclose such risks “more efficiently and effectively”, Gensler explained, while companies and investors would also benefit from the “clear rules of the road”.

The SEC’s plan comes as a major global engagement project sets out to engage with thousands of companies over improving environmental impact data disclosures.

Nonprofit group CDP has coordinated more than 680 financial institutions with over $130 trillion in assets to write to company boards requesting improved transparency on information related to climate change, deforestation, and water security.

Last year the CDP’s engagement with 7,176 companies resulted in nearly 3,200 agreeing to disclose their environmental information. In total, over 13,000 companies, representing 64% of global market capitalization, revealed their data through CDP last year.

However, nearly 4,000 companies — including Berkshire Hathaway, Chevron, Exxon Mobil, and Glencore — refused to respond to the request from CDP.

Mandatory environmental disclosure requirements coming into effect this year in EU, Japan, New Zealand, and India could help boost the level of disclosures.