SEC open to easing controversial climate disclosure proposal

February 15, 2023

Enhanced climate disclosure rules in the US could be subject to change after SEC chairman Gary Gensler admitted “adjustments” could be made.

The ‘Enhancement and Standardization of Climate-Related Disclosures for Investors’ rules were proposed last year and have invited negative feedback.

The proposals will require companies to accurately disclose their greenhouse gas emissions, as well as the likely impact climate-related risks will have on their operations, business, or financial condition.

Climate-related financial metrics would also be required in companies’ financial statements.

In a press interview, Gensler said: “We got nearly 15,000 public comments on that proposal.”

He added it was customary to “review all that, think through the economics, think through the legal authorities that commenters have raised. It’s quite customary to make adjustments.”

Feedback on the proposal can be found on the SEC’s website.

Though much of this is positive, and in support of the legislation and what it aims to achieve, criticisms have been levelled at the SEC and the negative impacts of further legislation.

The public feedback includes responses from all parties, including a letter penned by 17 Republican members of Congress.

The letter reads: “The proposed rule will implement burdensome regulations on smaller companies and create additional entry-level regulatory barriers for smaller companies attempting to become publicly traded.

“We believe this overreach is not only outside of the SEC’s expertise but also does not fall within the SEC’s regulatory power.”

Such anti-ESG rhetoric has become a growing theme in the US among Republicans, with political division around the role of the SEC growing.

Gensler has denied such rule modifications are tied to political influence.

He added that the proposed disclosure rules are simply aiming for straightforward climate transition plans from companies: “If a company doesn’t have a climate transition plan, that disclosure was: ‘We don’t we don’t have that such a plan or target’.

“Some companies have targets (on) how to manage this. And it was: if you have something, just disclose it and sort of describe it so that the investing public has the material features of those plans in that regard.”

The proposal was opened in March 2022 but extended to June of that year to allow further feedback to be given.