US SEC Chair defends proposed climate rules as a ‘benefit’ to capital markets, but timeline is uncertain

November 7, 2023|Written by Moriah Costa|Securities & Exchange Commission

Listed companies in the US may come under the spotlight of climate scrutiny, at least if rules proposed by the Securities and Exchange Commission come through. Gary Gensler, chair of the SEC defended the regulator’s proposed climate reporting rules, saying they would help companies avoid confusion from trying to use foreign frameworks.

Speaking at an event held by the US Chamber of Commerce, Gensler said the rules would “benefit capital markets” and make sure investors have access to any material information.

“We’re a securities regulator, that’s our authority. It’s about investors making decisions and ensuring that the material information is not just accurate [but that] there’s also some consistency and comparability,” Gensler said.

He noted that while other jurisdictions including the EU are making their own rules regarding climate disclosures, the SEC rules were not to “solve” for their laws. The EU’s climate disclosure firms could impact thousands of US firms.

“No US rule would mean that US companies, many of them, would be looking to other jurisdictions and need to comply with those other jurisdictions. A rule, sustained in court, is then something that they can at least point to and you can have those discussions about equivalence,” he said. 

Gensler said the  SEC’s proposed rules will hold up in court if challenged. The draft rule, which was first proposed in March 2022, would require listed companies to include data on greenhouse gas emissions as well as potential physical risks in regulatory filings.

The proposed ruling has received over 16,000 comments, with many lobby groups and companies voicing concerns about the burden of reporting, and Republican lawmakers have blasted the SEC over the effort to require climate disclosures.

The rules were set to be finalised earlier this year but the SEC has not indicated when they will be released, drawing ire from Democratic lawmakers. US Representative Maxine Waters recently wrote a letter to Gensler urging him to quickly finalise the rules as part of the SEC’s mandate “to protect investors, ensure fair and efficient markets, and facilitate capital formation”. 

Meanwhile, in early October, California passed its own groundbreaking climate disclosure legislation which requires large firms to reveal their carbon emissions.

This page was last updated November 7, 2023

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