Legislators urge SEC chair to finalize climate disclosure rule

A group of lawmakers, led by U.S. Sens. Elizabeth Warren (D-MA) and Sheldon Whitehouse (D-RI), recently urged the U.S. Securities and Exchange Commission (SEC) to finalize a climate disclosure rule without further delay.

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The climate rule would require public companies to disclose details about their emissions and climate-related risks.

“Climate risk disclosure is key to the SEC’s mission of ‘protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation,’” the lawmakers wrote in a letter to SEC Chair Gary Gensler. “The climate crisis and the clean energy transition are ‘two of the most significant, if not the most significant, factors in the performance of individual firms, markets, and the economy as a whole.’”

It was signed by Warren, Whitehouse, U.S. Reps. Dan Goldman (D-NY), Jamie Raskin (D-MD), and 47 other members of Congress.

In March of 2022, the SEC released a draft of the climate disclosure rule, requiring registrants to include certain climate-related disclosures in their SEC registration statements and reports. However, there have been reports that the SEC might be scaling back the scope of the rule due to opposition from corporate America.

“The SEC needs to stand up to the barrage of corporate lobbying thrown at it and issue a strong climate risk disclosure rule that includes comprehensive reporting requirements without any more delay,” Warren said. “A watered-down climate risk disclosure rule would be a failure of the SEC’s duty to protect investors.”

The letter expresses particular concern about any changes that weaken or altogether drop “Scope 3” emissions disclosure requirements from the final rule. The lawmakers said that would allow many companies to hide the majority of their exposure to climate risk from regulators and investors.

“The proposed rule was finally released in March 2022, the comment period closed in June 2022, and you have had eight months since then to review the comments,” the lawmakers wrote. “This rule has already been delayed enough – and after that long delay, SEC would be failing its duty to protect investors if it issues a watered-down rule missing key reporting requirements from large public companies that investors want and need.”