Joe Kennedy III, a Democrat, represented Massachusetts’ 4th Congressional District from 2013 to 2021. A great-grandson of Joseph P. Kennedy, he is on the board of directors of Woodwell Climate Research Center. Steven M. Rothstein is managing director at Ceres Accelerator for Sustainable Capital Markets.

In July 1934, the Securities and Exchange Commission’s first chairman addressed the National Press Club. In the perilous wake of the Great Crash of 1929, he was there to reassure American families, policymakers and businesses that the federal government could protect investors from future financial shocks by regulating securities — without penalizing or limiting economic success.

To accomplish this, Joseph P. Kennedy declared it was essential that companies “mak[e] available adequate information to the public upon which it can act intelligently.”

Eighty-seven years later, the mandate for this kind of sharp and smart regulation is as firm as ever before. Today, however, we are faced with a looming threat to market stability that was not foreseen by our forebears: the growing risk of climate change to our economy — and our very existence. That’s why the SEC must update its regulations and clearly require that companies disclose the risk that climate change poses to their businesses, and that they use standardized, transparent methodologies to do so that result in current, reliable data.

Fifty-five percent of Americans own some form of stock. These are not just abstract financial instruments. For most families, they are hard-earned retirement accounts, college savings and other essential resources tirelessly put aside for their families’ futures. This means that lack of information about climate-related business risks poses a direct threat to the economic security of millions of American families.

How, exactly? A long list of scientists, economists and government officials have made clear that climate change could disrupt asset valuations, international financial markets and global economic stability. A 2019 study from the National Bureau of Economic Research said that climate change’s impact on everything from farming to manufacturing could reduce the U.S. gross domestic product by 10.5 percent by the end of this century. The nonprofit Sustainability Accounting Standards Board has identified climate change as being a material risk factor for 68 out of 77 defined industry sectors.

A 2019 survey of 215 of the world’s 500 largest companies found nearly $1 trillion in reported climate-related financial risk. A report last year from the federal Commodity Futures Trading Commission put the threat in no uncertain terms: “Over time, if significant action is not taken to check rising global average temperatures, climate change impacts could impair the productive capacity of the economy and undermine its ability to generate employment, income, and opportunity.”

Current SEC leadership, acknowledging doubts on whether disclosure requirements related to climate change adequately inform investors of both risks and opportunities, has already solicited public comment to guide rulemaking. Hundreds of investors, companies, foundations and nonprofits organized by the sustainability nonprofit Ceres recently co-signed a letter to the SEC supporting bold mandatory disclosure. Twelve state attorneys general have echoed the call, as have 16 state treasurers and major U.S. companies from Apple to Salesforce. In a striking example of cross-sector collaboration, Woodwell Climate Research Center (formerly the Woods Hole Research Center) and Wellington Management, which has more than $1 trillion in assets under management, jointly released updated climate-change-related disclosure guidelines and called on the SEC to mandate such disclosures and ensure their quality.

In short: There is broad and deep support for advancing mandatory, rigorous climate disclosure, motivated not by politics but by a shared commitment to protecting the safety and soundness of the U.S. economy. American investors deserve to know the risks they face, and there is no greater systemic risk than climate change.

Disclosure can have a transformative impact on investment decisions. For example, the French central bank established a requirement for climate disclosures to certain categories of investors in 2016. After four years they found investments in fossil fuel companies declined within those categories by almost 40 percent, or 28 billion euros. Measurement through disclosure is the first step to management of climate risk.

Nearly 170 million Americans own at least some stock and could be devastated by the financial impacts of a changing climate. And then there are the 160 million other Americans who don’t — the largely low-income families who disproportionately pay the price of our climate inaction already with their health, their infrastructure and their livelihoods. Climate change is a crisis that affects us all. And it goes to the heart of the SEC’s mission, just as widespread speculation in stocks did in 1929.

Kennedy’s words about the SEC still ring true today: “In our hands has been placed the responsibility of giving all the aid of which government is capable to the better organization of the mechanism through which the savings of the people find their way into securities.”

In this moment, there is no more important assistance the SEC can provide to every family and business than approaching climate change with the urgency and rigor it demands.

Read more: