The Securities and Exchange Commission’s failure to complete an ambitious climate-related agenda in 2023 is making environmental activists nervous.

Less than a year before a US presidential election that could scuttle the regulator’s environmental, social and governance efforts, the SEC has yet to finish a mandate for public companies to disclose their environmental footprints. In addition, the agency’s specialized ESG enforcement task force has brought few climate cases since it was created in 2021.

During the Biden administration, the SEC has led the charge in calling for more financial regulation and disclosures tied to ESG issues. But pressure on Chair Gary Gensler has been building as the agency’s efforts become a political lightning rod.

Progressive advocates say the SEC should use securities regulations to tackle a range of social and climate issues, arguing that they are important to investors. But conservatives and business groups criticize such moves as overreach and have indicated they may sue to thwart them.

“There’s still a lot of unfinished business to get over the finish line as quickly as possible,” said Ben Cushing, director of the Sierra Club’s Fossil-Free Finance Campaign.

The most controversial part of the SEC’s agenda is a March 2022 proposal that would force businesses — in registration statements, annual reports or other documents — to detail risks that a warming planet poses to their operations. Under the plan, some large companies would also have to disclose emissions that come from other firms in their supply chain.

The SEC declined to comment.

Republican Opposition
Republicans, including two of the commission’s five members, have attacked the proposal, which was floated with only Democratic support.

Opponents have threatened lawsuits and congressional subpoenas, and have written thousands of comment letters against it. Some of their sharpest criticism has been aimed at a requirement to disclose so-called Scope 3 emissions — a broad term that essentially refers to pollution from other businesses in a company’s supply chain and from consumption of the firm’s products by customers.

Though Gensler says the agency is busy reviewing comment letters, the strong pushback has some activists worried that the window to wrap up the rules will close if the agency doesn’t move quickly. They’re also concerned that the plan could be scaled back. Another proposed regulation to crack down on inflated ESG claims by fund managers also hasn’t been finalized.

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