Republican Senators Press SEC Chair Gensler on Climate Disclosure
September 19, 2022
During a Senate Banking Committee Oversight Hearing on September 15, Securities and Exchange Commission (SEC) Chair Gary Gensler responded to questions on a variety of topics, with the SEC’s proposed climate disclosure requirements taking top billing.
Pressing ahead with the argument that ESG themes, including climate risk, do not belong in financial regulation, Ranking Member Pat Toomey (R-PA) said “it’s so undemocratic” to use financial rulemaking as a way in which to “advance a liberal agenda.” Senators from both sides of the aisle expressed concerns related to Scope 3 (supply chain emissions) reporting, particularly the potential impact on farmers and small businesses.
In response to the assertion that requiring climate disclosures is not part of the SEC’s remit, Gensler stated that “we are not a merit regulator” and that investors need these disclosures to receive the information they deem to be material. He agreed with Sen. Cortez-Masto (D-NV) that the new generation of investors is “deeply interested” in ESG, but also stated that many investors are specifically worried about climate-related impacts on supply chain, transition risk, and future regulations. He noted that the SEC received 14,000 responses to the climate disclosure proposal, with $50T in assets-under-management (AUM) mostly in favor of the proposed rules.
Gensler did express some sympathy for concerns related to Scope 3 reporting, noting that the SEC will want to ensure that it would not “touch private actors” like farm bureaus.
Other topics covered during the hearing included crypto regulation, Chinese companies’ audit compliance, and the pace of SEC rulemaking.
See here for CREFC’s response to the SEC’s climate proposal. Please contact sburki@crefc.org with any questions.