Requires reporting of climate-related financial risk by certain entities; defines climate-related financial risk to mean material harm to financial outcomes of the entity due to physical and transition risks.
The impact of S03697 on state laws primarily involves amendments to the Environmental Conservation Law and the State Finance Law. It establishes a new framework for how corporations operating in New York with revenues over $500 million must report their exposure to climate-related risks and their strategies to mitigate such risks. This mandate is intended to foster greater accountability and preparation among businesses as they adapt to a changing climate. Furthermore, the bill requires the creation of a Climate-related Financial Risk Disclosure Fund, which will manage the fees collected from businesses to support the implementation of these reporting requirements.
Bill S03697, introduced in the New York State Senate, aims to enhance transparency regarding climate-related financial risks by requiring large business entities to report such risks. The bill defines "climate-related financial risk" as material risks that may impact financial outcomes stemming from physical and transition risks related to climate change. By establishing specific reporting requirements, the legislation seeks to disclose how climate change affects corporate operations and financial stability, thus promoting better awareness and management of these risks among stakeholders.
Notable points of contention surrounding Bill S03697 may arise from the potential burden it places on businesses, particularly smaller entities or those with limited financial resources. Critics may argue that the reporting requirements could be onerous and complicate business operations. Additionally, there might be debates regarding the effectiveness of such disclosures in mitigating climate risks versus the costs incurred by companies to comply with these regulations. Proponents will likely argue that the benefits of increased transparency and risk management practices will outweigh any burdens imposed, particularly in light of growing concerns related to climate change and its potential economic impacts.