As expected, the U.S. Chamber of Commerce took issue with the SEC’s action. The group “is concerned that the prescriptive approach taken by the SEC will limit companies’ ability to provide information that shareholders and stakeholders find meaningful while at the same time requiring that companies provide information in securities filings that are not material to investors,” said Tom Quaadman, executive vice president of the Chamber’s Center for Capital Markets Competitiveness.
Former SEC Chair Jay Clayton and Rep. Patrick McHenry, ranking Republican on the House Financial Services, wrote in a Wall Street Journal op-ed that the SEC’s approach was “overreach” that would “deservedly” trigger legal challenges. Determining climate policy “is the job of lawmakers, not the SEC, whose role is to facilitate the investment decision-making process,” they said.
Sen. Pat Toomey, the ranking member of the Senate Banking Committee, issued a statement calling the proposal a “thinly-veiled effort” to sidestep Congress so unelected officials get to set climate change policy.
Business and environmental advocates will spend the coming weeks pouring over the rule’s details. The SEC will take public comment for as long as 60 days, and may revise the proposal before holding a second vote to finalize the regulation.
Still, the proposal is likely to face legal challenges. “The federal courts are increasingly becoming an arena where policy disagreements are settled, and this rule will likely be no different,” said Satyam Khanna, a consultant who served as a climate adviser to Allison Herren Lee, a Democratic commissioner.
After the vote, Gensler declined to comment about the expected lawsuits, though he stressed that the plan is narrow and within the agency’s remit. “This is a disclosure-based proposal” and not an attempt by the SEC to dictate companies’ environmental policies, Gensler told reporters. He wouldn’t specify when the agency would release a final rule, adding that the regulator would “take the time appropriate to get it right.”
The plan would also require companies to disclose:
• How management is preparing to deal with climate-change risks.
• Any climate issues affecting strategy or business model, and impacts of severe weather events.
• Use of analysis scenarios run by a company to determine climate resilience.
• Internal carbon pricing models.
This article was provided by Bloomberg News, with contributions by staff writer Tracey Longo.