The Securities and Exchange Commission is considering easing a controversial climate risk disclosure rule it issued last 12 months after receiving pushback from firms and investors.
“We got nearly 15,000 public comments on that proposal,” Chairman Gary Gensler said in an interview Friday on CNBC’s “Squawk Box.” He said it was customary for the agency to “review all that, think through the economics, think through the legal authorities that commenters have raised. It’s quite customary to make adjustments.”
The proposed “Enhancement and Standardization of Climate-Related Disclosures for Investors” requires publicly traded firms to open up to investors how their operations affect the climate and contribute to carbon emissions.
The plan, unveiled in March 2022, has been unpopular amongst C-suite leadership. Only 25% of CFOs surveyed by CNBC in 2022 support the disclosures.
“Investors are making investments based on these disclosures,” Gensler said.
He also denied that the rule modifications are tied to political influence. The Wall Street Journal first reported on the agency’s actions the identical day Rep. Patrick McHenry, R-N.C., chair of the House Financial Services Committee, announced a Republican working group aimed toward environmental, social and governance, or ESGs.
“The SEC’s climate disclosure rule is a first-rate example of this overreach that will have a wide-ranging impact on hard-working Americans across all walks of life,” McHenry said in a Feb. 3 statement. “I stay up for leading our committee’s ESG working group, which is able to concentrate on promoting strong, vibrant capital markets while defending the interests of all retail investors.”
Gensler said the proposed disclosures asked for an easy climate transition plan from firms.
“If an organization doesn’t have a climate transition plan, that disclosure was: ‘We do not we haven’t got that such a plan or goal,'” he said. “Some firms have targets (on) the way to manage this. And it was: if you will have something, just disclose it and form of describe it in order that the investing public has the fabric features of those plans in that regard.”
The SEC chief also pushed back against suggestions his agency is responding on to pressure from investors.
“I prefer to say (that) we’re merit neutral, whether it’s crypto or climate risk. But we’re not investor protection, neutral or capital formation neutral,” he said. “It’s about bringing consistency and comparability to disclosures which are already being made about climate risks, and investors appear to be today making decisions about this information, these disclosures.”
