Democrats urge SEC to finalize ‘strong’ climate disclosure rule

More than 50 congressional Democrats are calling on SEC Chairman Gary Gensler to quickly finalize the agency’s proposed climate disclosure rule and maintain the proposal’s provision that publicly traded companies disclose details of their emissions and climate-related risks.

“This rule has been delayed enough — and after that long delay,[the]SEC would fail in its duty to protect investors if it issued a watered-down rule that misses key reporting requirements from large public companies that investors want and need,” the Democratic lawmakers, led by Massachusetts Senator Elizabeth Warren, Rhode Island Senator Sheldon Whitehouse, New York Representative Dan Goldman, and Maryland Representative Jamie Raskin, wrote in a March 5 letter.

The SEC proposal was released in March 2022 and is expected to be finalized this year. It has broad support from institutional investors and asset managers, and would require listed companies to disclose a wide range of climate-related information in their registration statements and periodic reports, including the oversight and governance of climate-related risks by the board of directors and the management of the company, and how any climate-related risks identified have affected or are likely to affect the company’s strategy, business model and outlook, among other requirements.

The requirement that received the most significant debate during the proposal’s comment period, which ended in June, revolves around the disclosure of greenhouse gas emissions. Under the proposal, public companies would be required to disclose the greenhouse gas emissions they generate or purchase, and the indirect emissions generated by a company’s supply chain, if material, although smaller companies would be exempt from the latter requirement, too. also called Scope 3. .

In their letter, Democratic lawmakers cited media reports that the SEC is considering scaling back Scope 3 requirements and urged Mr. Gensler to chart a different course.

“Without extensive disclosures of Scope 3 emissions, companies could simply transfer emissions-intensive operations to suppliers or downstream customers to appear cleaner without actually reducing their emissions or the resulting transition risk, or redefining their organizational boundaries so that subsidiaries they own and operate, not part of their consolidated accounting group, as is common practice with private equity firms,” ​​the letter said.

At a Capitol Hill event last month, James Andrus, interim managing investment director of governance and sustainability at the $456.6 billion California Public Employees’ Retirement System, Sacramento, expressed his support for the proposal. “Getting this better information helps us allocate our funds more efficiently,” he said.

Congressional Republicans take a different view, and on Feb. 22, three leading Republicans wrote a letter to Mr. Gensler stating that the proposal exceeds the agency’s mission, expertise and authority and, if finalized in any form, would harm consumers, employees and employees will be unnecessarily harmed. the US economy.






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