Last week, SEC Chairman Gensler testified before the House Committee on Financial Services. As part of his talk, which addressed a number of topics--including, inter alia, artificial intelligence and crypto--Chairman Gensler offered a vigorous defense of the SEC proposal concerning mandatory climate disclosures which had been published in March 2022. He did this despite the skepticism and hostility the proposal has encountered, particularly from the new Republican majority in the House of Representatives, demonstrating the Biden Administration's continued support of this policy initiative.
Specifically, Chairman Gensler defended the proposal by stating that "[h]undreds of companies . . . are already making climate-risk disclosures" and "[i]nvestors managing tens of trillions of dollars in assets are making investment decisions relying on those disclosures," so "a rule for consistent and comparable climate-risk disclosure by public companies" was necessary. Further, Chairman Gensler emphasized the point that the SEC has "an important role . . . to ensur[e] [] public companies' full, fair, and truthful disclosure about material risks," and effectively identified "climate risk" as one such material risk.
However, it is noteworthy that Chairman Gensler publicly noted that the SEC would "carefully [] take into consideration the nearly 15,000 comments [] received on the proposal," and that the SEC "will consider adjustments that the staff, and ultimately the Commission, think are appropriate." This may indicate that certain aspects of the proposed disclosures that had been considered particularly objectionable--e.g., the disclosure of Scope 3 GHG emissions--may be excluded from the final rule. Still, until the final rule is promulgated, there is a great deal of uncertainty for any company or organization impacted by the proposed SEC climate disclosures.
[T]he Commission has proposed a rule for consistent and comparable climate-risk disclosure by public companies. Hundreds of companies today already are making climate-risk disclosures. Investors managing tens of trillions of dollars in assets are making investment decisions relying on those disclosures. . . .
[T]he SEC has no role as to climate risk itself. But we do have an important role with regard to ensuring for public companies' full, fair, and truthful disclosure about material risks.
We carefully will take into consideration the nearly 15,000 comments we've received on the proposal so far. Just as with any proposal, we greatly benefit from public input and will consider adjustments that the staff, and ultimately the Commission, think are appropriate.
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