Huffman, Warren, and 36 Lawmakers Urge SEC to Remain Focused on Climate Risk

“Investors need access to climate risk disclosures that are reliable, standardized, and easily accessible to properly assess the risks associated with their investments.”

June 05, 2024

Washington, D.C. – Representative Jared Huffman (D-Calif.) and Senator Elizabeth Warren (D-Mass.), Chair of the Senate Banking Subcommittee on Economic Policy, joined 36 lawmakers in a letter to the Securities and Exchange Commission (SEC) urging the SEC to remain focused on the risk that climate change poses to investors. Among other calls to action, the letter urges the Commission to enforce its existing climate risk guidance and rules while its final climate risk disclosure rule is stayed, use every resource available to combat the legal challenges the rule is facing, and robustly implement the rule once the stay is lifted. 

The lawmakers are asking the SEC to firmly state that it will ensure previous climate-related rules and guidance, including its 2010 guidance, are thoroughly enforced. The lawmakers are also asking the SEC to 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 (the “EU”), as well as those put forth by the International Sustainability Standards Board (“ISSB”). 

Assuming the rule survives litigation, the lawmakers are calling on the SEC to take a number of steps to ensure robust enforcement of the rule. First, in order to limit companies’ ability to game this rule and avoid disclosures, the SEC must quickly share guidance once the rule is upheld on how to assess “materiality” and how companies must conduct and disclose materiality assessments. Second, the Commission should recognize alternative reporting regimes such as those used by the International Sustainability Standards Board (ISSB) to ensure compliance with the final rule. Third, the Commission should commit sufficient staff and resources to the implementation and enforcement of this rule. Finally, the SEC should finalize a strong Environmental, Social, and Governance (ESG) Disclosures for Investment Advisers and Investment Companies Rule, also referred to as the ESG Funds Rule, with mandatory Scope 1, 2, and 3 emissions requirements for investment funds that market themselves based on climate-related criteria. The ESG funds rule would complement the Climate Risk Disclosure Rule by providing consistent standards for ESG disclosures, giving investors information to make more informed decisions and to determine if ESG marketing statements translate into concrete measures to address ESG goals. 

In addition to Senator Warren and Representative Waters, 9 Senators and 27 Representatives joined the letter: 

Senators Cory Booker (D-N.J.), Ed Markey (D-Mass.), Jeff Merkley (D-Ore.), Bernie Sanders (I-Vt.), Brian Schatz (D-Hawaii), Tina Smith (D-Minn.), Chris Van Hollen (D-Md.), Peter Welch (D-Vt.), Sheldon Whitehouse (D-R.I.). 

Representatives Joyce Beatty (D-Ohio), Earl Blumenauer (D-Ore.), Jamaal Bowman (D-N.Y.), Julia Brownley (D-Calif.), André Carson (D-Ind.), Greg Casar (D-Texas), Emanuel Cleaver (D-Mo.), Adriano Espaillat (D-N.Y.), Dwight Evans (D-Pa.), Valerie Foushee (D-N.C.), Sylvia Garcia (D-Texas), Jonathan Jackson (D-Ill.), Pramila Jayapal (D-Wash.), Barbara Lee (D-Calif.), Betty McCollum (D-Minn.), Kevin Mullin (D-Calif.), Eleanor Norton (D-D.C.), Ilhan Omar (D-Minn.), Delia Ramirez (D-Ill.), Jamie Raskin (D-Md.), Shri Thanedar (D-Mich.), Bennie Thompson (D-Miss.), Rashida Tlaib (D-Mich.), Nydia Velázquez (D-N.Y.), Bonnie Watson Coleman (D-N.J.), Nikema Williams (D-Ga.). 

Despite strong investor support for the proposed rule, after fierce pushback from corporate America, the final Climate Risk Disclosure rule was significantly scaled back. For example, the final rule completely removes disclosure requirements for Scope 3 emissions, which account for as much as 90% of emissions for oil and gas companies. The rule, by imposing materiality qualifiers throughout its requirements, now also allows corporate managers significant discretion to decide if they wish to disclose information like Scope 1 and 2 greenhouse gas (GHG) emissions. The lawmakers are concerned these loopholes could give companies an excuse to limit or omit entirely their climate risk disclosures. 

The lawmakers requested answers on the SEC’s plan to protect investors and implement the new climate risk disclosure rule by June 18, 2024. 

Senator Warren has long fought to push financial regulators to act on climate and climate financial risk:

  • In May 2024, Senator Warren and Representatives Levin (D-Calif.) and Schiff (D-Calif.) sent a letter to the Federal Insurance Office (FIO) and the National Association of Insurance Commissioners (NAIC) urging them to ensure comprehensive and transparent data collection to understand and address the impact of climate change on property insurance premiums.
  • In April 2024, Senator Warren and Representatives Sean Casten (D-Ill.) and Veronica Escobar (D-Texas) led a letter to the Federal Acquisition Regulation (FAR) Council urging them to finalize the Federal Supplier Climate Risks and Resilience Rule for federal contractors as quickly as possible.
  • In March 2024, Senator Elizabeth Warren (D-Mass.), released a statement describing the Securities and Exchange Commission’s (SEC) finalized climate risk disclosure rule as “the bare minimum.”
  • In January 2024, during a Senate Banking Committee hearing, Senator Warren called for the Biden Administration to swiftly finalize its data call about the effects of climate change on the insurance market – and to collect all the data necessary to understand our gaps in insurance coverage and the right regulatory response.
  • In September 2023, Senators Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Martin Heinrich (D-N.M.), Ed Markey (D-Mass.), Sheldon Whitehouse (D-R.I.), and Jeff Merkley (D-Ore.) sent a letter to Secretary of the Treasury Janet Yellen and newly-appointed Treasury Climate Counselor Ethan Zindler, urging the Treasury Department (Treasury) to take key actions pertaining to climate and climate-related financial risk to avert the impending environmental and economic crises.
  • In September 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren urged Chair Gensler to quickly finalize a strong climate risk disclosure rule, reminding him that he has a mandate to protect investors and strong public support.
  • In September 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren highlighted the recent withdrawals of major insurance companies from states that have a high and growing  risk of climate disasters, the impact of this insurance crisis on homeowners, and the need for increased transparency from insurance companies.
  • In September 2023, Senators Warren, Chris Van Hollen (D-Md.), and Whitehouse sent a letter to Secretary Yellen and Federal Insurance Office (FIO) Director Steven Seitz calling on the FIO to finalize its proposal to collect data from major insurers to better assess the impact of climate change on insurance availability and affordability, including in communities that are most vulnerable to the effects of climate change.
  • In March 2023, Senators Warren, Whitehouse, and Markey sent a letter to Secretary Yellen following Climate Counselor John Morton’s departure and urging Treasury to take swift and aggressive action to tackle the climate crisis, which threatens our health, security, and financial system. 
  • In March 2023, Senators Warren, Whitehouse, and Representatives Dan Goldman (D-N.Y.) and Raskin and 47 of their colleagues sent a letter to SEC Chair  Gary Gensler, urging him to protect investors and finalize a strong climate disclosure rule without further delay.
  • In September 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called on SEC Chair Gary Gensler to protect investors and stand up to fossil fuel lobbying by issuing a strong climate risk disclosure rule quickly.
  • In June 2022, Senator Warren led a comment letter with Senators Whitehouse and Brian Schatz (D-Hawaii) on the SEC’s mandatory climate disclosure rule, highlighting several areas for improvement and key elements that the SEC should preserve in its final rule, including strong Scope 3 emissions disclosure requirements.
  • In March 2022, Senator Warren led a letter with Senators Whitehouse and Schatz urging the SEC to require disclosure of anti-climate lobbying activities in the Commission’s rule.
  • In February 2022, Senator Warren led a letter to the SEC about the delayed release of the SEC’s proposed climate change disclosure rule, urging them to act quickly to get a rule out.
  • In August 2021, Senators Warren, Kirsten Gillibrand (D-N.Y.), and Chris Van Hollen (D-Md.) sent a letter to John Morton – the first Climate Counselor at the new Climate Hub at the U.S. Department of the Treasury – urging swift and aggressive action to tackle the climate crisis, a major threat to the country’s health, security, and financial system.
  • In May 2021, Senator Warren and Congressman Andy Levin (D-Mich.) introduced the Buy Green Act to use the enormous breadth of U.S. federal procurement to help fight the climate crisis, spur innovation, and boost demand for American-made clean energy products at home and in the rapidly-growing markets for green products abroad.
  • In May 2021, Senator Warren and Congressman Levin introduced the National Institutes of Clean Energy Act of 2021, legislation that would invest $400 billion over the next ten years to establish and operate a new system of institutes at the Department of Energy dedicated to research and development (R&D) of advanced clean energy technologies.
  • In April 2021, Senator Warren and Representative Sean Casten (D-Ill.) reintroduced the Climate Risk Disclosure Act of 2021 which would reduce the chances of environmental and financial catastrophe by requiring public companies to disclose more information about their exposure to climate-related risks.
  • In March 2021, Senator Warren unveiled the BUILD GREEN Infrastructure and Jobs Act which would invest $500 billion over ten years in state, local, and tribal projects to jumpstart the transition to all electric public vehicles and rail and help modernize the nation's crumbling infrastructure.