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Many Americans who are on the brink of retirement are behind when it comes to savings.
Young workers have the opportunity to avoid that fate by using the power of compound interest.
Here’s why it pays to start saving for retirement earlier.

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A shift from pensions to 401(k) plans has made workers responsible for ensuring they have enough money to live on in retirement.
New research shows some Americans who are on the brink of retirement are nowhere close to ready to funding that goal, with almost half of individuals 55 and older having no retirement savings, according to a Senate report released last week.

Most Americans — 79% — now agree there is a retirement crisis, up from 67% in 2020, according to a new report from the National Institute on Retirement Security. Meanwhile, more than half of Americans — 55% — are worried they won’t be able to achieve financial security in retirement.
Younger investors have a unique opportunity to avoid that dilemma, according to experts who testified at a Senate hearing last week.
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The reason comes down to compound interest — the money earned on interest — that Albert Einstein reportedly called “the most powerful force in the universe.”
The more time you have to invest toward a goal, the more the money can compound or grow. Investors who start early may need to put down less money than those who begin later to reach a desired amount.

“Starting earlier obviously makes the math work much better,” Dan Doonan, executive director at the National Institute on Retirement Security, said during the Senate hearing.

Proposals to start wealth accumulation earlier

Lawmakers on both sides of the aisle have introduced bills to help make it possible to get started saving for retirement and building wealth earlier.
One bipartisan proposal — the Helping Young Americans Save for Retirement Act — introduced by Sens. Bill Cassidy, R-La., and Tim Kaine, D-Va., would lower the age for young workers to participate in certain workplace retirement plans to 18 from 21, giving them three additional years’ opportunity to save and for interest to compound.
Another bill — the 401Kids Savings Act, led by Democratic Sens. Bob Casey of Pennsylvania, Chuck Schumer of New York and Ron Wyden of Oregon — would create savings accounts for all children starting at birth, with federal support for low- and moderate-income families. Once a child reaches age 18, they would be able to use the funds toward higher education, starting a small business, purchasing a home or retirement.

“Starting to save at birth also means families can put the market to work for them, leading to compound savings and greater assets later in life,” Casey said during the Senate hearing.
By starting from birth, individuals may accumulate almost $473,000 more toward retirement compared with if they started at 32, according to research from the Aspen Institute.
Earlier enrollment in retirement accounts could lead to “huge progress,” noted Eric Stevenson, president of Nationwide Retirement Solutions, who testified at the Senate hearing.
“If we auto-enrolled everyone at age 21 when they graduated from college, we wouldn’t have a crisis,” Stevenson said.

How young investors can get started now

Workers who want to get started investing toward retirement earlier do not necessarily need to wait for new legislation to be passed.
Young individuals of any age who have compensation — such as wages, salary or tips — are eligible to invest in an individual retirement account. Experts are particularly keen on Roth IRAs, which you fund with post-tax dollars, for young workers.
Investors younger than 50 can contribute up to $7,000 to a Roth IRA in 2024. Of note, younger workers with income less than that threshold can only contribute up to the amount they earn. Parents or grandparents who contribute on a young worker’s behalf are also limited to how much the young worker earns.

Opening a Roth IRA early helps start what is known as the five-year rule, when withdrawals from earnings may be taken tax- and penalty-free. To qualify, five years must have elapsed between the tax year of the first Roth IRA contribution and earnings withdrawal. You must also be at least age 59½.
Money contributed to Roth IRAs can always be taken out without penalties.
“The greatest money-making asset any person can possess is time, and young people have more of it than anyone,” Ed Slott, an IRA expert and certified public accountant, previously told CNBC.com.
“They should capitalize on that time,” he added.
Experts who testified at last week’s Senate hearing on retirement agreed.
“We should start with wealth and accumulate it,” said Teresa Ghilarducci, professor of economics at The New School for Social Research and author of the book, “Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy.”
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Venture capital funding in the U.S. for companies founded by women has been trending up in recent years.
According to research by Venture Capital Journal, women-led funds’ share of total fundraising increased to about 3% of the $107 billion raised last year by venture funds worldwide.
Investors in startups generally must be accredited, which the U.S. Securities and Exchange Commission defines as individuals with incomes of at least $200,000 or over $1 million in net worth, minus their primary residence.

Women are increasingly investing in startups founded by women.
Despite a challenging fundraising environment, women-led venture capital funds made gains in 2023. According to research by Venture Capital Journal, women-led funds’ share of total fundraising increased to about 3% of the $107 billion raised last year by venture funds worldwide, up from less than 2% of the 2022 total.

While it’s a small fraction of the total pool, venture capital funding in the U.S. for companies founded by women has been trending up in recent years. The upswing has had some help from the creation of incubators for women founders, more new companies founded by women and more venture capital funds focused on underrepresented founders.
“The access to wealth that women have in the U.S. today is really at a historic level. We have about $25 trillion of wealth in the U.S., and we’re approaching 50% of all wealth being owned by women in the U.S. And that wealth is power if we use it,” said Portfolia founder and CEO Trish Costello.

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Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

Portfolia creates and manages about 16 venture funds designed for individual investors who want to invest in a portfolio of mostly women-led startups and want to learn more about venture investing. The firm has investments in over 140 companies, most with women founders. 
“It’s all about putting our money behind the companies that will enhance our lives and provide us those returns,” Costello said.
While roughly 75% of the firm’s portfolio comprises companies with women CEOs, Costello said, about 25% are led by men and are aimed at solving problems for women, including a male-led company, YourChoice Therapeutics, that is developing a birth control pill for men.

How one startup benefited from women investors

Dr. Elizabeth Clayborne shows the NasaClip device she invented to stop nosebleeds.
Steve Washington, CNBC

One of the beneficiaries of increased interest in investing in underrepresented founders is NasaClip, founded by Dr. Elizabeth Clayborne, an emergency physician and mother of two. She developed a device to stop nosebleeds after treating patients in the emergency room, recognizing the need for a hands-free first-aid solution. 
She said the startup has raised $3.25 million in funding in the last four years, mostly from women investors. The funds enabled her to bring the product to market and her company is now bringing in revenue, she said. 
“When women invest in women, they also bring to the table more than just capital; they’re introducing the social network that is needed to be successful,” Clayborne said. “I don’t think I would have actually gotten off the ground at all, if I had not been believed in early on by female investors.”

Opportunities for women-focused venture capital

Costello said her desire to lead a women-focused venture capital firm was born a decade ago after a male colleague told her that men wouldn’t invest in women’s health issues because of what he called the “ick factor.” 
“I realized that there was a whole area of investment that could have great returns and that women were actually very comfortable with putting their money behind,” said Costello.
Portfolia launched its first fund in 2015, and part of its mission is to train the next generation of venture capitalists. While its fund managers make the investment decisions, investors are invited to pitch meetings and to work on due diligence, so they can ask questions of the entrepreneurs and offer their insights.
“Everything that we do is to use our communities and our knowledge and our expertise to both invest and to make this company successful,” said Costello. 

Investors in Portfolia funds must be accredited, which the U.S. Securities and Exchange Commission defines as individuals having a net worth over $1 million, excluding a primary residence, or income over $200,000 a year ($300,000 for a married couple) for the last two years and a reasonable expectation of earning the same for the current year.
The average investment in a Portfolia fund is $35,000, and investments may be as much as $500,000. The minimum investment is $10,000 — and each fund invests in 10 to 12 companies.
“We let them dip their toe in and basically give it a try and see what venture investing is all about,” Costello said. 
Venture investing is high risk, but with the potential for high returns — and research has shown that women-owned startups deliver twice as much per dollar as men.
Still, investments are illiquid and can take several years to generate any return. Many startups fail. So, financial advisors generally recommend at most 10% of a client’s assets be in high-risk investments. 
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Japan’s Nikkei 225 smashed through the 40,000 level on Monday, soaring to another record high — but it did not surprise Japan expert Jesper Koll who expects another 37% upside for the benchmark stock index.
Koll has predicted the Nikkei could rise to 55,000 points by end-2025, saying it is “perfectly reasonable.”
Still, there are risks that could derail that optimism. They include tax hikes in Japan and a potential global trade war, both of which could hurt Japanese stocks, Koll noted.

Skyline of Tokyo, Japan.
Jackyenjoyphotography | Moment | Getty Images

Japan’s Nikkei 225 smashed through the 40,000 level on Monday, soaring past another milestone to a new record high — but it did not surprise Japan expert Jesper Koll who expects another 37% upside for the benchmark stock index.
“In my view, it is perfectly reasonable to expect a rise in the Nikkei to 55,000 by end-2025. I [know I sound] more like a bubble-era stockbroker than a gentleman, but I cannot hide my excitement,” Koll, expert director at financial services firm Monex Group, told CNBC on Monday.

Koll was referring to the asset and equity bubble Japan saw in the late 80s, which resulted in the Nikkei hitting its 1989 highs.
But the euphoria did not last. In 1990, the bubble burst and Japan fell into a period of economic stagnation, known today as its “lost decades.” In less than a year, the Nikkei lost half its value.

Nikkei’s new highs

For the past two weeks, Japan’s benchmark stock index has been testing uncharted territory.
On Feb. 22, the index surpassed its previous all-time high of 38,915.87, set on Dec. 29, 1989 — breaching a record that was held for 34 years.
Following that, the index climbed past the 39,000 mark, and eventually crossed the 40,000 level on Monday.

In July last year, Koll told CNBC’s “Street Signs Asia” he expected the Nikkei to hit 40,000 “over the next 12 months.”

When asked what drives his optimism, Koll told CNBC on Monday that it was in part due to Japan’s ability to be a “capital value-creating superpower.”
He said his optimism does not stem from the Bank of Japan’s monetary actions, nor a boost from the so-called “new capitalism” initiative announced by Prime Minister Fumio Kishida in June.
Instead, his optimism comes from Japan’s private sector.
“Japan’s strength comes bottom-up from the private sector,” Koll said.
“Japan’s companies command superior earnings power. Two decades of relentless ‘kaizen’ restructuring have turned corporate Japan into a capital value-creating superpower.”

There is no question that Japanese ‘salarymen CEOs’ created more fundamental economic value than Wall Street’s superstar CEOs.

Jesper Koll
Expert director, Monex Group

“Kaizen” refers broadly to the art of constant improvement through small changes. First adopted by Japanese businesses after World War II, it is a Japanese term that seeks “continuous improvement.”
Notably, it views improvement in productivity as a “gradual and methodical process,” recognizing that improvement can come from any employee at any time. 
“The days of almost desperate top-down crisis management and macro stimulus are over,” Koll said. “That was the fake rallies we got over the past 30 years.”
Koll said that between 1995 and 2022, the top-line sales growth for Topix companies was up by 1.1 times; but earnings per share rose by 11 times.
He compared it to the S&P 500 companies on Wall Street, pointing out those companies reported a sale growth of 3 times, and EPS rose by 6 times. 
“There is no question that Japanese ‘salarymen CEOs’ created more fundamental economic value than Wall Street’s superstar CEOs.”

‘Go-go Nikkei’

Koll’s optimism does not end here. He said it is “perfectly reasonable” to expect the Nikkei to rise to 55,000 before the end of 2025.
“Go-go Nikkei,” he quipped, making a pun on the Japanese translation of 5-5 being “go-go.”
He said Japanese CEOs are the “undisputed global champions of delivering on the hard part, true economic value creation.”

Veteran value investor Warren Buffett increased his stakes in five of Japan’s largest trading houses in 2023, but promised the CEO of each company that Berkshire Hathaway “would never buy more than 9.9% without their consent.”
“They all welcomed us in, and their results have exceeded our expectations since we purchased the group,” he told CNBC in April last year.
“We couldn’t feel better about the investment [in Japan],” he added, after speaking to the CEOs of those trading houses, namely Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo.
According to Koll, the real question investors have to ask now is: What is the probability for Japanese profits and EPS to rise by 37% between now and end-2025?
He said that most foreign investors he spoke to think an EPS growth of about 30-40% is a “perfectly reasonable forecast.” He pointed out that after all, EPS surged 11 times between 1995 to 2002, during a time when Japan was experiencing deflation.

Potential headwinds

Still, there are may be global and domestic risks that could derail that optimism.
At home, Koll said Kishida is aiming to boost government spending, including raising child-care allowances and increased spending on deep tech university research and defense — but the prime minister has yet to present plans on how to pay for these initiatives.
As such, Koll is expecting tax hikes to be on the horizon, perhaps in 2025 or 2026. Historically, he said, tax increments have always been a big challenge for Japanese stocks.
The risk on the global front is what the Japan expert calls a “Made-in-China currency war.” If Chinese authorities are forced to devalue the Chinese yuan by about 20% to 30%, it would pose a huge challenge to Japanese competitiveness, he added.
Explaining his view, Koll said China might seek to weaken its currency in order to boost competitiveness if the country falls into outright deflation.
Another potential headwind could be U.S. or European tariffs imposed on Chinese imports.
“In a global trade war, Japan gets hurt,” Koll pointed out. More

The IRS last week announced the hiring of two former crypto executives to beef up its digital currency service, reporting, compliance and enforcement programs.
While crypto tax reporting is still in flux, tax pros are expecting increased scrutiny.

Shannonstent | E+ | Getty Images

As the IRS bolsters its cryptocurrency expertise, tax professionals are bracing for increased scrutiny of digital currency. 
Digital assets are one of the agency’s “priority areas,” according to a press release sent last week. The IRS announced it hired two former crypto executives to beef up its digital currency service, reporting, compliance and enforcement programs.

“Everybody’s been waiting for the tidal wave of this enforcement activity,” said James Creech, an attorney and senior manager at accounting firm Baker Tilly.
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With billions of funding enacted via the Inflation Reduction Act, the IRS has focused on reversing historically low audit rates of higher earners, corporations and complex partnerships.
There has also been a rise in digital currency tax investigations from the agency’s crime unit, including unreported capital gains, mining and other income, according to the division’s 2023 annual report.
Eric Hylton, national director of compliance for Alliantgroup, also expects a rise in civil cases prompted by a “John Doe summons,” where the IRS requires companies to turn over crypto transaction data over a certain threshold.

These actions will trigger a “significant amount” of crypto enforcement, said Hylton, who is a former IRS commissioner for the agency’s small business and self-employed division.

‘Where the hammer comes down’

Another way the IRS has been collecting crypto data is via a question about digital assets on the front page of individual tax returns.
Since 2019, taxpayers have had to answer Form 1040’s yes-or-no question, which could invite IRS scrutiny if you haven’t answered truthfully, according to Ryan Losi, a certified public accountant and executive vice president of CPA firm Piascik.
“If you’ve consistently shown a pattern of deceitfulness, and it starts to look like willfulness, that’s where the hammer comes down,” he said.

Increased reporting to ‘close the tax gap’

As part of a broader effort to “close the tax gap,” the U.S. Department of the Treasury and the IRS in August rolled out proposed tax reporting regulations for cryptocurrency, nonfungible tokens and other digital assets, which would apply to 2025 transactions.
Mandatory yearly tax reporting from digital currency brokers was originally enacted in 2021 via President Joe Biden’s bipartisan infrastructure deal. According to the Joint Committee on Taxation, the measure was estimated to raise nearly $28 billion over a decade.

But with the rules in flux, crypto tax reporting has been “very hodgepodge,” Baker Tilly’s Creech said.
Currently, exchanges send different forms, often without an accurate “basis” — or your original purchase price — which is used to calculate gains. “You’re very much on your own when it comes to reporting,” he added.Don’t miss these stories from CNBC PRO: More

Smart Tax Planning

There have been a lot of recent developments for student loan borrowers, some of which may impact their 2023 tax filing.
Here’s what to know.

Damircudic | E+ | Getty Images

For many borrowers, the tax deduction is back

There may be one bright spot for student loan borrowers whose bills resumed last October. Their 2023 tax bill could be a little lower.
The student loan interest deduction allows qualifying borrowers to deduct up to $2,500 a year in interest paid on eligible private or federal education debt.
Before the Covid pandemic, nearly 13 million taxpayers took advantage of the tax break. Yet most borrowers couldn’t claim the deduction on federal student loans during the period student loan bills were on pause, from March 2020 to October 2023. (With interest rates on those debts temporarily set to zero, there was no interest accruing for borrowers to claim.)
Interest on federal student loans began accruing again in September of last year, and the first post-pause payments were due in October. That means borrowers could have interest on three or four months’ worth of payments to deduct for 2023, which may reduce their tax liability, said higher education expert Mark Kantrowitz.

More from Smart Tax Planning:

Here’s a look at more tax-planning news.

Depending on your tax bracket and how much interest you paid, the student loan interest deduction could be worth up to $550 a year, Kantrowitz said. The deduction is “above the line,” meaning you don’t need to itemize your taxes to claim it.

There are income limits, however.
For 2023, the deduction starts to phase out for individuals with a modified adjusted gross income of $75,000, and those with a MAGI of $90,000 or more are not eligible at all. For married couples filing jointly, the phaseout begins at $155,000, and those with a MAGI of $185,000 or more are ineligible.
Borrowers’ eligibility for the student loan interest deduction may also be reduced if their employer made payments on their student loans as a work benefit, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
Your lender or student loan servicer reports your interest payments for the tax year to the IRS on a tax form called a 1098-E, and should provide you with a copy, too. If you don’t receive the form, you should be able to get it from your servicer.

Forgiven debt may be taxable at the state level

After the Supreme Court blocked President Joe Biden’s sweeping student loan forgiveness plan in June, his administration has explored all of its existing authority to leave people with less education debt. 
Since Biden has been in office, almost 3.9 million borrowers have gotten their student loans cleared, totaling $138 billion in relief.
That debt forgiveness has largely gone to borrowers enrolled in income-driven repayment plans and those pursuing the Public Service Loan Forgiveness program. Disabled borrowers and students from schools of questionable quality have also benefited.

Canceled student debt is normally treated as additional earned income by the IRS. However, the American Rescue Plan Act of 2021 shielded forgiven education debt from federal taxable income until Dec. 31, 2025.
Most borrowers won’t have to worry about state taxes, either, as only a handful of states may impose levies on forgiven education debt. Experts recommend inquiring with your state to learn if you need to report your erased debt.
Some borrowers who made payments on their debt after they were supposed to receive forgiveness are being sent refunds by the U.S. Department of Education. These payments are not taxable, Kantrowitz said. More

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As a tax reporter for CNBC and a certified financial planner, I focus on tax strategy all year, including how certain moves may affect long-term plans.
Here’s how I’ve tackled tax planning in my portfolio, and how my strategy has changed over the past decade.

Seksan Mongkhonkhamsao | Moment | Getty Images

Roughly 10 years ago, I began shifting careers from concert promoter to personal finance journalist. Back then, I thought about taxes exactly once per year — when it was time to file my annual return.
Now, as a tax reporter for CNBC, I focus on tax strategy all year, including how retirement contribution decisions may affect long-term plans. It helps that I am one of a handful of working journalists to have earned the certified financial planner designation.

Over the years, I’ve learned tax planning can’t happen in a silo because today’s decisions often have future consequences.
Certain tax moves are “like a balloon,” Ashton Lawrence, CFP and director at Mariner Wealth Advisors in Greenville, South Carolina, once told me. “If you squeeze it at one end, you’re going to inflate it somewhere else.”

More from Women and Wealth:

Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

Here’s how I’ve tackled tax planning in my portfolio, and how my strategy has changed over the past decade.

Pretax vs. Roth retirement contributions

One of the biggest questions from investors is whether to save money into a pretax or after-tax Roth account.
While pretax contributions can reduce adjusted gross income, you’ll owe regular taxes on withdrawals in retirement. By contrast, there’s no upfront tax break for Roth contributions, but the money grows tax-free. 

Generally, pretax contributions benefit higher earners, while after-tax savings make sense in a lower bracket, experts say. Of course, factors such as matching contributions, each plan’s investment options and fees, along with legacy goals, can affect the decision.

Early in my career, I focused on Roth savings, which made sense with lower income and decades until retirement. But it’s tough to predict future brackets, so I’ve shifted to tax diversification across investing accounts.
I’ve prioritized my employer match with pretax and Roth 401(k) deferrals, while also making Roth individual retirement account contributions. I’ve also funneled extra money into my taxable brokerage account, which incurs capital gains taxes on earnings yearly, but can be tapped before retirement.

There’s also a small nest egg in my health savings account, which I added to during my years of self-employment. I’ve invested the balance and hope to make tax-free withdrawals for medical expenses in retirement.

Tax diversification offers flexibility

The goal is flexibility. With a mix of tax-deferred, tax-free and taxable savings, I’ll have different accounts to pull from, depending on my yearly tax situation.
JoAnn May, a CFP and certified public accountant at Forest Asset Management in Berwyn, Illinois, told me, “ideally, it’s nice to have clients with all types of accounts” for different types of assets.

Indeed, your asset location can trigger a surprise tax bill, as I learned from capital gains in a brokerage account early on. Generally, income-producing investments, such as bonds or real estate investment trusts, are better suited for tax-deferred or tax-free accounts.
However, experts are quick to warn you shouldn’t “let the tax tail wag the investing dog.” Your portfolio should be a mix of investments based on your goals, risk tolerance and timeline — not solely based on tax savings.
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The SEC is poised to issue a final rule on Wednesday around climate disclosures.
It would give investors more transparency into the threat climate change poses to U.S. publicly listed companies, and how they contribute to a warming planet via emissions.
The U.S. would join other nations that have already required some level of climate reporting. California Gov. Gavin Newsom also signed a climate disclosure law in October.

Securities and Exchange Commission Chair Gary Gensler testifies before the Financial Services and General Government Subcommittee on July 19, 2023 in Washington. 
Win Mcnamee | Getty Images News | Getty Images

The Securities and Exchange Commission is poised to issue a final rule on Wednesday that would require companies to beef up disclosures around climate risks — a level of transparency that should help investors assess a company’s value in a warming world, said experts.
At a high level, the rule — initially proposed in March 2022 — would expand investors’ insight into the threat that climate change poses to publicly listed companies and how businesses contribute to a warming planet.

Climate disclosures would be made in annual filings companies make to the SEC, such as a Form 10-K, and in registration statements filed before an initial public offering.
“I think climate disclosures have largely become table stakes for the investment community,” said Lindsey Stewart, director of investment stewardship research at Morningstar.

Current climate disclosures are ‘uncommon’

Ships on the Panama Canal on August 21, 2023. The Panama Canal Authority had reduced maximum ship weights and daily vessel transits to conserve water amid historic drought. Shipping experts fear such events could become the new normal as rainfall shortfalls highlight climate risks.
Daniel Gonzalez/Anadolu Agency via Getty Images

Such data points are currently spotty.
Publicly listed U.S. companies make climate disclosures on a voluntary basis, and they remain “uncommon in all but a few sectors,” according to S&P Global.
Corporations will likely be required to disclose short- and long-term physical risks, such as the impacts of hurricanes, droughts, wildfires, extreme heat and sea level rise, Stewart said.

They’d also likely report “transition” risks from legal or regulatory changes, new technology and business practices that aim to adapt to a hotter world, he said.

Corporations would also be required to report their total greenhouse gas emissions, both created directly by a company and indirectly along its supply chain. The depth of that carbon reporting may be diluted from the SEC’s initial proposal in March 2022 due to blowback and to insulate the rule from legal challenges, experts said.
Overall, transparency around climate risk may be essential for investors to gauge if a company’s stock is worth holding or if its stock price is reasonable, experts said — for example, is it too expensive given high exposure to climate risk, or perhaps fairly priced considering it’s well positioned?
“Investors want to be able to accurately price those risks and opportunities as they look medium and longer term at their investments,” especially retirement investors who may have a timeline decades in the future, said Rachel Curley, director of policy and programs at the U.S. Sustainable Investment Forum.

Climate change is a ‘momentous risk’ to capital markets

A damaged gas station is taped off after Hurricane Idalia made landfall in Cedar Key, Florida, on Aug. 30, 2023.
Christian Monterrosa/Bloomberg via Getty Images

The U.S. now experiences a billion-dollar disaster every three weeks, on average; during the 1980s, that happened every four months, according to the Fifth National Climate Assessment, issued last year by the White House.
The economic toll due to factors like agricultural loss, tourism impact, falling real estate values, and property and infrastructure damage is expected to grow.
Allison Herren Lee, a former SEC commissioner who voted in favor of the SEC’s initial rule proposal in 2022 called climate change “one of the most momentous risks to face capital markets since the inception of this agency.”
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Many other nations — including Chile, China, Egypt, European Union member countries, India, New Zealand and the United Kingdom — already require climate reporting by public companies, according to the Climate Governance Initiative.
In October, California Gov. Gavin Newsom signed a law that requires large companies active in the state to give a detailed accounting of their greenhouse gas emissions, starting in 2026.

Challenges are ‘likely’

Congressional and legal challenges to the rule “are likely,” Jaret Seiberg, financial services and housing policy analyst at TD Cowen, wrote Thursday in a research note.
Last year, a group of House and Senate Republicans sent a letter to SEC Chair Gary Gensler criticizing the proposal, saying it “exceeds the [agency’s] mission, expertise, and authority.”

“Congress created the SEC to carry out the mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation — not to advance progressive climate policies,” according to its three signatories, Rep. Patrick McHenry, R-N.C., Sen. Tim Scott, R-S.C., and Rep. Bill Huizenga, R-Mich.

Carbon emissions accounting is contentious

Smoke from a coal-fired power station. 
Chris Ratcliffe/Bloomberg via Getty Images

One particularly contentious area involves the depth of greenhouse gas reporting, experts said.
The SEC proposal outlined three tiers of emissions disclosures: Scopes 1, 2 and 3.
Scope 1 emissions are direct. They’re caused by operating the things a company owns or controls: for example, by running machinery to make products, driving vehicles, or heating buildings and powering computers, according to the World Economic Forum.
Scope 2 emissions are indirect. They’re created by the production of energy that an organization buys, the WEF said. Companies can cut Scope 2 emissions by installing solar panels or using renewable energy rather than using electricity from fossil fuels, for example, it said.
Scope 3 emissions are also indirect but broader: They include emissions “up and down [a company’s] value chain,” according to Deloitte. For example, they may “be emitted by a company’s suppliers of raw material, or when a consumer uses a company’s products,” S&P Global wrote.

I think climate disclosures have largely become table stakes for the investment community.

Lindsey Stewart
director of investment stewardship research at Morningstar

The SEC proposal mandates reporting about Scopes 1 and 2 emissions.
However, companies would have some discretion to report Scope 3 emissions. They’d be required if investors would be reasonably likely to consider such information “material” or if a corporation set a carbon-reduction goal that includes Scope 3 emissions, Curley said.
For many businesses, Scope 3 emissions account for more than 70% of their carbon footprint, Deloitte estimates.
“Emissions-wise, Scope 3 is nearly always the big one,” it said.
However, Scope 3 emissions are “tougher to calculate and politically more contentious,” Seiberg wrote. He expects the final SEC rule to include Scope 1 and 2 emissions but exclude Scope 3; the latter will likely be left to a future rulemaking, he said.
U.S. companies may have to disclose such emissions according to California or international standards, experts said. More

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The price of bitcoin rose to start the week, edging even closer to its all-time high after the rally took a breather over the weekend.
The flagship cryptocurrency was last higher by 3.7% at $65,127.00, according to Coin Metrics. Earlier, it rose to as much as $65,606.17, its highest level since November 2021. Ether advanced 1% to $3,508.24.

Both coins are coming off their best week in almost a year (bitcoin gained about 21% and ether 16%) but paused their run over the weekend as the market digested two days of steep outflows from the Grayscale Bitcoin ETF that were offset by inflows into other “newborn” bitcoin ETFs.

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Bitcoin is edging toward its all-time high

“With the birth of these 9 new ETFs the big moves now tend to take place during the normal trading week rather than the weekends,” said Antoni Trenchev, cofounder of crypto exchange Nexo. “What we’re seeing today … might well be a rerun of early last week when bitcoin surged $10,000 in the space of a couple of days. We’re in that sort of environment when a day or two of sideways consolidation can precede explosive price action thanks to the voracious demand of these new spot ETFs.”
Investors have been extra eager to see bitcoin approach its all-time high. At $65,000 it’s sitting about 6% off its November 2021 intraday record of $68,982.20.
Some analysts have suggested that while it could keep rising in the short term, bitcoin may may cool in the next few weeks, as unrealized profit margins approach extreme levels. Bitcoin’s realized price is sitting at just about $42,700, according to CryptoQuant.
Nevertheless, long-term investors are confident that the combination of increasing demand for bitcoin through the new U.S. exchange-traded funds and a tighter supply expected after the April halving event will push the price of bitcoin to a new all-time high.

Crypto has also been getting a slight bid from the stock market, where the tech-heavy Nasdaq Composite reached an all-time high on Friday, becoming the last of the major stock indexes to hit a record close this year. David Duong, head of institutional research at Coinbase, said that although March could be a month of sideways grinding for bitcoin, the cryptocurrency is benefitting from an AI- and blockchain technology-driven productivity boom he expects is here to stay.
Large-cap cryptocurrency moves Monday were more modest, although prices of smaller coins, particularly meme coins, have swelled. Dogecoin jumped 5%, while Shiba Inu coin surged 15%. Analysts point to their performance as evidence that retail investors, who have been absent for much of the recent crypto rally, are starting to return to the crypto market.
Crypto equities rode the bitcoin wave. Coinbase and Microstrategy rose 6% and 9%, respectively, in premarket trading Monday. In the mining group, CleanSpark jumped more than 8%, Marathon Digital traded about 7% higher, Iris Energy advanced 5.5% and Riot Platforms added 4%. More