Democrats call on SEC to end ‘hard’ climate disclosure rule

More than 50 Democrats in Congress are calling on Securities and Exchange Commission Chairman Gary Gensler to quickly finalize the agency’s proposed climate disclosure rule and keep the proposal that public companies must disclose details of their emissions and climate-related risks.

“The introduction of this rule has already been delayed enough — and after this long delay (), the SEC will not fulfill its duty to protect investors if it issues a simplified rule that lacks the key reporting requirements from large public companies that investors want and need.” Democratic lawmakers, led by Senator Elizabeth Warren of Massachusetts, Senator Sheldon Whitehouse of Rhode Island, Rep. Dan Goldman of New York, and Rep. Jamie Ruskin of Maryland, 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 will require public companies to disclose a plethora of climate-related information in their registration statements and periodic reports, including oversight and climate-related risk management, board and company management. and how any identified climate-related risks have affected or may affect the company’s strategy, business model and prospects, among other requirements.

The requirement that sparked the most heated debate during the proposal’s discussion period, which ended in June, concerns the disclosure of greenhouse gas emissions. Under the proposal, public companies would be required to disclose information about the greenhouse gas emissions they produce or buy, as well as indirect emissions that occur in the company’s supply chain, if they are material, although smaller companies would be exempt from the latter requirement, called Scope. coverage 3. .

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

“Without comprehensive disclosure of Scope 3 emissions, companies could also simply outsource emission-intensive activities to suppliers or downstream customers to appear cleaner without actually reducing their emissions or the associated transition risk, or redrawing their organizational boundaries to the subsidiaries they own and operate are not part of their consolidated accounting group, as is customary for private equity firms,” the letter says.

At an event on Capitol Hill last month, James Andrus, acting managing investment director for the management and sustainability of California’s $456.6 billion Public Employees’ Retirement System in Sacramento, expressed support for the proposal. “Getting this better information will allow us to 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 went beyond the agency’s mission, experience, and authority and, if further developed in any form, would cause unnecessary harm to consumers, workers and the US economy.

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