SEC’s climate disclosure mandates cause concern for Hill, GOP colleagues

One-size-fits-all, uniform mandates instituted by the Securities and Exchange Commission (SEC) would be “deeply misguided” for an issue as complex as climate change, according to U.S. Rep. French Hill (R-AR) and 22 of his Republican colleagues serving on the U.S. House Financial Services Committee.

“The SEC has made clear that its top priority in the coming months will be to mandate disclosures for public companies regarding climate change and greenhouse gas emissions,” wrote Rep. Hill and the lawmakers in a June 3 letter sent to SEC Chairman Gary Gensler. “We are concerned that in the context of climate change disclosures, the SEC is currently on a course that will take it far afield of its statutory mission to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.”

Thus far, the lawmakers wrote, the SEC has taken “a scattershot approach” to the issue, including a staff directive to update existing guidance on climate change disclosure and the establishment of an enforcement task force charged with identifying gaps or misstatements in issuers’ disclosure of climate risk under existing rules.

Among the GOP lawmakers who joined Rep. Hill in signing the letter were U.S. Reps. Andy Barr (R-KY), Ann Wagner (R-MO), Bill Huizenga (R-MI), Bryan Steil (R-WI), Anthony Gonzalez (R-OH), Tom Emmer (R-MN), and Trey Hollingsworth (R-IN). 

Rep. Hill and the members reminded the SEC of “the continued importance of the materiality standard for corporate disclosure,” as well as the commission’s obligations under the Administrative Procedures Act and its reputation as an expert regulator that operates independently of political agendas, according to their letter.

“The SEC’s increasing willingness to wade into social and public policy debates, like climate change, risks the credibility and independence that has made the SEC such an effective regulator since its inception,” the lawmakers wrote, warning the commission against politicizing itself and diminishing its credibility in the eyes of the public.

“We urge you and your fellow commissioners to ensure that any further action the SEC takes regarding climate-related disclosure is clearly tied to its core competencies of investor protection; maintaining fair, orderly, and efficient markets; and promoting capital formation,” Rep. Hill and the members wrote. “This ultimately will ensure that the Commission’s rulemakings are in the long-term interest of Main Street investors.”