Lawmakers to SEC: Don’t give up on climate disclosure rule

Top Democrats want the Wall Street regulator to make it tougher.

June 06, 2024

Thirty-eight lawmakers are urging the Securities and Exchange Commission to strengthen climate emissions reporting requirements for publicly traded companies

The message shows progressive anxiety that the agency may not be prepared to push as hard as it can to force executives to disclose their carbon footprints. Its landmark rule on the issue is currently on hold pending litigation.

“While the rule is an important step forward that will provide investors with key information about publicly traded companies’ climate risks and emissions, the rule was significantly weakened in response to intense corporate lobbying over the past two years, in ways that offer too much discretion to corporate managers to decide what information must be disclosed,” the lawmakers say in a June 4 letter to SEC Chair Gary Gensler.

They were referring to the agency’s decision to exclude reporting requirements for “Scope 3 emissions” — those generated through a company’s supply chain.

The business community overwhelmingly opposed that mandate, but so did a handful of farm state Democratic senators in tough reelection campaigns, fearing agribusiness would be significantly burdened.

While the changes didn’t stop lawsuits or legislation against the rulemaking, they likely mollified Sens. Sherrod Brown (D-Ohio) and Jon Tester (D-Mont.), who might have otherwise made things politically difficult for the Biden administration and now may oppose a vote in the coming weeks to repeal the new mandates.

But progressives continue to bemoan the concession, including Sen. Elizabeth Warren (D-Mass.), chair of the Senate Banking Subcommittee on Economic Policy, who helped author this week's letter with House Financial Services ranking member Maxine Waters (D-Calif.).

"The Commission exercised its discretion to stay the final rule pending the completion of judicial review," the lawmakers wrote.

"One important way that you can begin to address the final rule’s shortfalls during this time is to ensure robust enforcement of existing SEC climate disclosure-related guidance. Should the rule survive its legal challenges, the Commission should then focus its efforts on vigorous implementation and enforcement of the rule."

The letter goes on to list a litany of ways the SEC already has the power to demand companies do more to account for their contributions to global warming, and strongly urges the SEC to take advantage of those existing authorities.

It reminds Gensler that the SEC "should remind issuers that U.S. companies that are subject to alternative climate-related disclosure regimes must comply with those reporting regimes, including those from California and the European Union," which are more vigorous than the current federal standards.

And it calls on the SEC to "vigorously defend the final rule through the courts … spar[ing] no litigation resources to protect the rule."

The members end with a list of questions they want Gensler to answer in the coming weeks, including what the SEC is doing to prepare to begin enforcement of the rule if and when the courts clear it for implementation.

Signers of the letter include Senate Health, Education, Labor and Pensions Chair Bernie Sanders (I-Vt.), Senate Budget Chair Sheldon Whitehouse (D-R.I.) and Sen. Ed Markey (D-Mass.), alongside House Congressional Progressive Caucus Chair Pramila Jayapal (D-Wash.), Oversight and Accountability ranking member Jamie Raskin (D-Md.), and Reps. Jared Huffman (D-Calif.) and Rashida Tlaib (D-Mich.).


By:  Emma Dumain
Source: E&E News PM