Officials and Trade Groups React to SEC Proposed Rule on Climate Risk Disclosure

Early reaction to the SEC’s proposed disclosure rule on climate risk suggests significant disagreement among government officials and trade groups.

Rule Proposal

The proposed rule changes will require both domestic and foreign registrants to include certain climate-related information in registration statements and periodic reports (e.g., Form 10-K or Form 20-F). The proposed amendments include gradual phase-in periods to implement these rule changes.

Statements

Congresswoman Maxine Waters supported the proposed regulations, stating that they will provide important information that will protect financial markets and allow investors to make decisions that "accurately integrate and reflect risks posed by climate change." She asserted that the proposed rule will ultimately help the "nation’s savers and investors to keep more of their hard-earned funds" by ensuring that "corporate America is focused on climate change[.]"

Congressman Sherrod Brown supported the proposal, stating that it will provide a consistent framework for determining climate risk and not overburden small business. He applauded the proposal for "protect[ing] workers, investors, and our economy."

Congressman Patrick J. Toomey criticized the proposal, stating that its climate disclosure requirements go "far beyond the SEC’s mission and expertise." He stressed that climate change is a complex political problem encompassed within American energy policy, and should not be guided by unelected financial regulators.

SIFMA President and CEO Kenneth E. Bensten, Jr., described the proposal as "principles-based" allowing for a balance between "tailored disclosures and comparable quantitative information," ensuring a cost-effective and responsive disclosure regime. He expressed concern about the proposal’s Scope 3, minimal safe harbor provisions, and short adoption period.

U.S. Chamber of Commerce Executive Vice President of the Chamber’s Center for Capital Markets Competitiveness, Tom Quaadman criticized the proposal's prescriptive approach, asserting that it will require the disclosure of information that is not material to investors." He noted, however, that the Chamber will work with the SEC to produce "workable rules for climate disclosures" that provide "meaningful information to investors."