SEC weighs making ‘adjustments’ to controversial climate risk disclosure rule, Chairman Gensler says

SEC weighs making 'adjustments' to controversial climate risk disclosure rule, Chairman Gensler says

The Securities and Exchange Commission is considering easing a controversial climate risk disclosure rule it issued last year after receiving pushback from companies and investors.

“We got nearly 15,000 public comments on that proposal,” Chairman Gary Gensler said in an interview Friday on CNBC’s “Squawk Box.” He said it was customary for the agency to “review all that, think through the economics, think through the legal authorities that commenters have raised. It’s quite customary to make adjustments.”

The proposed “Enhancement and Standardization of Climate-Related Disclosures for Investors” requires publicly traded companies to disclose to investors how their operations affect the climate and contribute to carbon emissions.

The plan, unveiled in March 2022, has been unpopular among C-suite leadership. Only 25% of CFOs surveyed by CNBC in 2022 support the disclosures.

“Investors are making investments based on these disclosures,” Gensler said.

He also denied that the rule modifications are tied to political influence. The Wall Street Journal first reported on the agency’s actions the same day Rep. Patrick McHenry, R-N.C., chair of the House Financial Services Committee, announced a Republican working group aimed at environmental, social and governance, or ESGs.

“The SEC’s climate disclosure rule is a prime example of this overreach that would have a wide-ranging impact on hard-working Americans across all walks of life,” McHenry said in a Feb. 3 statement. “I look forward to leading our committee’s ESG working group, which will focus on promoting strong, vibrant capital markets while defending the interests of all retail investors.”

Gensler said the proposed disclosures asked for a straightforward climate transition plan from companies.

“If a company doesn’t have a climate transition plan, that disclosure was: ‘We don’t we don’t have that such a plan or target,'” he said. “Some companies have targets (on) how to manage this. And it was: if you have something, just disclose it and sort of describe it so that the investing public has the material features of those plans in that regard.”

The SEC chief also pushed back against suggestions his agency is responding directly to pressure from investors.

“I like to say (that) we’re merit neutral, whether it’s crypto or climate risk. But we’re not investor protection, neutral or capital formation neutral,” he said. “It’s about bringing consistency and comparability to disclosures that are already being made about climate risks, and investors seem to be today making decisions about this information, these disclosures.”

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