SEC’s Door Open as Amazon, Chamber Plead for Softer Climate Rule

The SEC has held more than three dozen meetings since December with stakeholders—including Amazon, Goldman Sachs, and the US Chamber of Commerce—that are still hoping to shape corporate climate reporting rules the agency looks to finish this spring.

The Chamber spoke to Securities and Exchange Commission Chair Gary Gensler after publicly reiterating concerns about the agency’s proposal for greenhouse gas emissions disclosures and other climate reporting by companies, according to SEC records. Mika Morse, Gensler’s climate policy counsel, in recent months also participated in various meetings with the Chamber and other organizations, including sustainable investing group Ceres.

The spate of meetings comes as the fate of several of the proposal’s major provisions remain uncertain despite the SEC’s latest regulatory agenda targeting final rules for April. Several of the recent discussions covered plans for companies to disclose supply chain emissions and climate change’s financial toll—ideas that many businesses question and numerous investor advocates endorse.

“We’ve been encouraged by the give and take in our conversations with the SEC,” said Evan Williams, senior director at the Chamber’s Center for Capital Markets Competitiveness. “The chair has approached our meetings with integrity.”

Chamber Meetings

The Chamber has met at least four times with Gensler or his aides since December. The most recent meeting reported was between Williams and Morse on Feb. 15.

The flurry of meetings comes after the SEC re-opened the comment period for the climate proposal in October because of a technical problem with the regulator’s website.

In addition to the Chamber, Gensler has sat down with progressive advocacy group Americans for Financial Reform, the World Economic Forum and French bank BNP Paribas SA in recent months, according to SEC records.

The Chamber was among the organizations that submitted a letter after the comment period re-opened, reiterating concerns in November about the usefulness of requiring big companies to report their Scope 3 greenhouse gas emissions, which come from their suppliers or customers. The Chamber and others also have criticized the agency’s plans for companies to report how extreme weather and the costs to combat climate change could impact their financial performance, with the business group saying they’re unworkable.

The agency has listened to concerns raised by the Chamber and other organizations, Williams said.

“We just want to be as helpful as we can in providing the perspectives of our membership as they consider making changes,” he said.

A representative for Gensler declined to comment.

Open to Meeting

Ceres has been among the most active and vocal environmental groups, sending at least four letters since November urging the commission to mandate greenhouse gas emissions reporting, including Scope 3 emissions, for most companies. The group has also met with Gensler, his staff and Democratic Commissioner Caroline Crenshaw with more meetings planned.

“I give the SEC credit,” said Steven Rothstein, managing director of Ceres Accelerator for Sustainable Capital Markets. “They are taking the public input process very seriously, talking to lots of constituencies.”

Still it’s not clear what direction the regulator might go on some of the most contentious aspects of its proposal.

“We know they are meeting with a number of stakeholders, which is exactly what you want any public regulator to do: understand the range of perspectives. And because of that we would assume the final rule would be different from the draft,” Rothstein said.

The SEC has continued to grapple with thousands of letters from the public and Republican legal threats stemming from the Supreme Court’s West Virginia v. Environmental Protection Agency decision last year. The court ruled that agencies must have clear permission from Congress to create regulations that have major economic or political effects.

Gensler has said the SEC would make “appropriate” changes to the rules before they’re finalized, but hasn’t elaborated. The SEC at one time was looking to finish the regulations by October 2022, but the agency now is eyeing April, according to its latest regulatory agenda.

Up for Debate

Amazon.com Inc. met with staff from Gensler’s office and from the Office of the Chief Accountant twice in December to discuss the SEC’s draft financial statement disclosures and requirements related to Scope 3 emissions, according to SEC records.

The e-commerce giant declined to comment about its discussions with the regulator. But in its June comment letter, Amazon sought more flexibility and stronger protections for how companies report Scope 3 carbon emissions.

The company also suggested an alternative to the commission’s footnote disclosure, suggesting that companies instead should rely on a table to report the combined costs of any climate event and transition activity as identified by management. Those costs for example could include asset impairments related to a tornado-damaged warehouse or the costs to switch to an all-electric delivery fleet, Amazon wrote.

Companies have called the SEC’s draft financial disclosure rules onerous. Under the proposal, companies would have to disclose the impact of severe weather or efforts to reduce emissions if they totaled at least 1% of any financial statement line item including revenue, inventory or costs of goods sold.

The Center for Climate and Energy Solutions reintroduced the concept of Amazon’s table in its Feb. 13 letter to the commission. The environmental think tank, which advocates for emission reductions, is one of many groups that have weighed in on the proposal months after the official comment period closed.

“It’s one option for serious consideration and it’s meant to spark a conversation and to generate ideas,” said Verena Radulovic, vice president for business engagement at the center, which supports mandatory climate-related financial disclosures.

‘Points on the Board’

It’s unclear whether Goldman Sachs Group Inc. discussed Scope 3 or the financial statement disclosures in two meetings it had with Morse since December. It also hasn’t submitted a formal comment letter with the agency to share its views on the matters. But the firm’s CEO, David Solomon, joined bank executives who met with Gensler last May about Scope 3 concerns and the mechanics of the proposed financial statement disclosures, according to an SEC memorandum.

A Goldman Sachs representative declined to comment.

Other major organizations also are getting time with the SEC, including its Republican commissioners.

The American Petroleum Institute met with Commissioner Hester Peirce in January to discuss its comment letter, the Republican’s office said. The oil and gas industry trade group—which also met with SEC accounting officials last May—has continued to push its message with the Wall Street regulator that the market is not equipped to meet the SEC’s vast reporting demands.

The industry group wants the commission to go back to the drawing board for both the financial statement impact and requirements to report Scope 3 greenhouse gas emissions and propose requirements that are narrower in scope.

“We’re trying to be active and be convincing and the advocacy that we undertake to be able to put points on the board as much as we can,” said Aaron Padilla, vice president of corporate policy for API. “We’ve had a regular dialogue with the SEC. We’ve been working this really hard for many many months and we’re just going to continue to do so until we see the fine rule.”