SEC Chairman Gensler delivered a set of prepared remarks at the Ceres Investor Briefing on April 12, 2022, in which he defended the SEC's newly proposed rule concerning climate disclosures.
As expected, Chairman Gensler's defense of the proposal highlighted how these rules were situated in "the context of [the SEC's] long tradition of disclosures," including the "disclosure of risk factors" from the 1960s and "the SEC's guidance from 2010 regarding climate-related disclosures." Chairman Gensler further noted that "[c]limate[] disclosures are already happening," and that "the SEC has a role to play in terms of bringing some standardization to the conversation happening between issuers and investors, particularly when it comes to disclosures that are material to investors." In effect, Chairman Gensler justified this new proposal of climate disclosures by attempting to situate it within a longstanding tradition of required disclosures, and that the SEC is only stepping in to provide a standard set of disclosures that would provide "consistent, comparable, and decision-useful information" about a topic that is already the subject of investor interest.
Notably, Chairman Gensler did not directly address one of the most frequent criticisms of these new proposed disclosures--namely, that the SEC is mandating disclosures about an issue that is beyond its proper purview, which is limited to the financial markets. Although Chairman Gensler addressed this criticism implicitly--by, among other things, noting the significant investor demand for such climate disclosures--he did not offer a full-throated defense of why climate disclosures should be considered relevant. This is especially noteworthy when considering the considerable pushback from industry and certain investors that climate disclosures, or ESG issues generally, are not a proper subject for disclosures. In essence, the rationale used by Chairman Gensler--that this proposal is linked to investor demand for such disclosures--runs the risk of eroding if public opinion shifts against such measures. Such a development is far from impossible, given shifting political currents.
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