The Securities and Exchange Commission set regulatory precedent last month when it instructed a financial institution to publicly disclose a shareholder proposal which asked the bank to assess “the greenhouse gas emissions resulting from its lending portfolio.” 

In a reversal of a long held position, the nation’s financial regulator said that the bank was required to include the shareholder proposal in its upcoming proxy statement. The bank had opposed the disclosure, but the SEC overruled it in a February 13 notice.

The shift marks a significant move in the government’s use of disclosure requirements to regulate climate change and could encourage a flood of similar disclosure requests from other activist investors across the industry, leading to new, cumbersome work for banks subject to them.

In noting that the shareholder proposal “focuses on the significant issue of climate change,” the SEC reversed its past position that such shareholder resolutions are generally disallowed under the so-called “ordinary business” rule – a notion that publicly traded companies can exclude shareholder proposals from their proxy materials if they relate to the company’s ordinary business operations.

The move also illustrates that despite the lack of climate change legislation, companies are increasingly being required to address environmental factors in their business practices. The notice also came the day after President Obama’s State of the Union address where he promised a broader executive role in climate change mitigation if Congress failed to act.