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SEC Urged by Republican Senators to Drop Climate Disclosure Plan

April 5, 2022, 4:01 AM

Senate Republicans are urging the Securities and Exchange Commission to withdraw a proposal that would require companies to disclose greenhouse gas emissions, arguing the move is outside of the agency’s mission.

“It is unclear from where the SEC has derived this drastic change in authority,” top Republicans on the Senate Banking, Housing, and Urban Affairs, and the Environment and Public Works committees wrote in a letter to SEC Chairman Gary Gensler made public Tuesday. “The SEC is not tasked with environmental regulation, nor has Congress amended the SEC’s regulatory authority to pursue the proposed climate disclosures.”

The SEC in March announced a proposed rule that, for the first time, would direct publicly traded companies to include emissions information and other climate-related risks on their registration statements and reports. The plan seeks to standardize the metrics for companies’ climate disclosures to bolster enforcement and reliability.

Gensler said last month that enhanced disclosures are necessary because climate risks can pose a significant financial threat to companies, and investors should have reliable information to make informed decisions. “I believe the SEC has a role to play when there’s this level of demand for consistent and comparable information that may affect financial performance,” he said in March 21 statement.

SEC to Require Companies to Disclose Emissions in New Plan

Hill Opposition

The letter from Republicans on the two committees follows a similar letter opposing the rule on Monday from Democratic Sen. Joe Manchin (W.Va.).

The opposition from some lawmakers and industry lobbyists to the SEC’s plan isn’t likely to derail the agency from shepherding the rule through the regulatory process. But it could cause the SEC heartburn from Republicans on Capitol Hill, as well as engender legal challenges.

The Republican letter, led by Sen. Kevin Cramer (R-N.D.), has the support of nearly 20 GOP senators on both committees, including Banking ranking member Pat Toomey (Pa.) and EPW’s top Republican, Shelley Moore Capito (W.Va.).

“This proposal comes with enormous costs for employers,” wrote the lawmakers, many of whom are members of both panels. “As described in the SEC’s proposal, public companies would face billions in new compliance costs to meet the new requirements, which will likely reduce the amount of capital that could otherwise be deployed in the U.S. economy. Investors will face harm, too, in the form of reduced shareholder returns.”

The SEC is seeking public comment on the draft rule by May 20, or 30 days after it’s published in the Federal Register, whichever period is longer.

To contact the reporter on this story: Kellie Lunney in Washington at klunney@bloombergindustry.com

To contact the editors responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com; Meghashyam Mali at mmali@bloombergindustry.com