Corporate efforts to weaken SEC climate rule revealed

Two investigations have shed light on the extent of corporate lobbying efforts aimed at undermining the climate disclosure rule proposed by the Securities and Exchange Commission (SEC).

Research undertaken by corporate watchdog Documented and the New York Times shows how the State Financial Officers’ Foundation (SFOF), a group with ties to the fossil fuel industry, has coordinated interventions by Republican lawmakers in opposition to the SEC’s plans.

Meanwhile, the Guardian has revealed that the Business Roundtable, a network of top CEOs which is calling for the SEC rule to be weakened and delayed, met with SEC officials at least three times since April 2021. The group is also involved in discussions with members of Congress and officials in the Biden administration, the paper reports.

The SEC proposal would require publicly-held companies to disclose their carbon emissions and the risks that climate change poses to their business models. In June 2022, 24 attorneys general from Republican-led states wrote to the SEC opposing mandatory climate disclosures. Documented found that 18 of the signatories are from states where the state’s auditor or treasurer is affiliated with SFOF.

Last week, many of the same officials signed a further letter to the SEC opposing new plans aimed at tackling greenwashing by investors and their advisors. They claimed the SEC lacked the authority to enact the proposal, echoing their attacks on the original climate disclosure rule. Legal scholars have defended the move as falling squarely within the traditional SEC framework.

Documented has mapped out the SFOF’s ties to anti-climate groups such as the Heritage Foundation, which is an SFOF sponsor, and fossil fuel interests such as the American Petroleum Institute (API), with which the SFOF recently hosted a call. The investigation has also revealed that the SFOF is sponsored by investment manager Federated Hermes, despite the bank touting its commitment to sustainability as being a central part of its business.

Members of the Business Roundtable include chief executives of some of the world’s biggest companies, including Apple, Pepsi, Walmart and Google. Although the group initially expressed support for the SEC proposals, it has now declared its opposition to some of its central provisions, such as the requirement for firms to disclose greenhouse gas emissions produced throughout their supply chains.

In a 17-page letter sent in June, the Business Roundtable asked the SEC to “revise and re-propose” its draft rule, a process which would likely significantly delay its introduction, currently scheduled for 2024.

Despite opposition from fossil fuel lobbyists and certain corporate interest groups, the SEC’s proposals have been shown to enjoy significant support among investors, the intended audience for the new disclosures. Polling carried out on behalf of the Americans for Financial Reform Education Fund and Public Citizen found that seventy 70% of US retail investors support mandatory climate risk disclosures.