On September 12, 2023, SEC Chairman Gensler testified before the Senate concerning a number of significant issues for the SEC. Among them was the SEC's still-pending rule on climate risk disclosures, which was first proposed in March 2022. Chairman Gensler took advantage of the opportunity offered by this testimony to once again re-affirm his support for the SEC's proposed climate disclosures, stating that "[a]lready today, issuers are making climate risk disclosures" and so, "in fulfilling the Commission's important role, we put out for comment a proposal about climate-related disclosure to bring consistency and comparability to such disclosures." In effect, Chairman Gensler reiterated one of the primary rationales behind the proposed climate disclosure rule--that investors are demanding this information, and the SEC should therefore ensure that the data is provided to investors in a useful way that enables comparability between different industries and companies--a key rationale behind much regulation.

Still, Commissioner Gensler also revealed a certain degree of flexibility concerning the details of the proposal. In his prepared testimony, he stated the SEC would "consider adjustments to the proposed rule" based in part on the "more than 15,000 comments" that the SEC had received. Further, in response to certain questions posed by Senators, Chairman Gensler further indicated that Scope 3 emissions were understood to be particularly complex as a subject matter for disclosure, which may indicate that the ultimate SEC rule may reveal a more flexible approach to such disclosures. Nonetheless, the key point is clear--the Biden Administration's SEC does not intend to back away from its climate risk disclosure rule. And the publications of this climate disclosure rule may occur within a matter of weeks.

The SEC has no role as to climate risk itself. We, however, do have an important role in helping to ensure that public companies make full, fair, and truthful disclosure about the material risks they face.

Our federal securities laws lay out a basic bargain in our markets. Investors get to decide which risks to take, so long as public companies raising money from the public make what President Franklin Roosevelt called "complete and truthful disclosure."


Already today, issuers are making climate risk disclosures, and investors are making investment decisions based on those disclosures. Indeed, a majority of the top thousand issuers by market cap already make such disclosures, including what's known as Scope 1 and Scope 2 greenhouse gas emissions. Further, investors representing tens of trillions of dollars in assets are making decisions relying on those disclosures.


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