SEC Chair Gensler Ceres Investor Briefing on SEC Climate Disclosure Rule
Securities and Exchange Commission
Building Upon a Long Tradition” – Remarks before the Ceres Investor Briefing
Tuesday, April 12, 2022
Topline
- SEC Chair Gensler discussed the recent proposal mandating climate-risk disclosures by public companies.
- Gensler urged the public to provide feedback on every line item.
Topic: Briefing on the SEC Climate Disclosure Rule
Chair Gensler Remarks
In his remarks, Gensler gave an overview of the proposed rule for enhancement and standardization of climate-related disclosures for investors. He said the role of the SEC is to bring standardization to the conversation of disclosures that are material. Gensler stated information is material if there is a substantial likelihood that a reasonable shareholder would consider it important in making an investor voter decision or may significantly alter the total mix of information made available.
Gensler stated that currently, climate disclosures are already happening and that they are already impacting investors voting decisions. He said many of the existing disclosures build upon the Task Force Climate-Related Financial Disclosures (TCFD) and greenhouse gas protocol. He went on to discuss how climate risks can pose significant financial risks to companies and how investors need information about climate risks. He said it makes since to build upon what investors are already doing.
Gensler discussed the importance of disclosures being filed in Form 10-K, specifically allowing investors to gather information from one place. He discussed Scope 1, 2, and 3 requirements and how the proposal is consistent with the SEC’s long-standing traditions and the law. He urged the public to provide feedback on every line item.
Panel Discussion
When asked where the legal authority comes from to create the rule, Gensler said the SEC’s authority is embedded in the Commission’s long-standing traditions, adding that the Commission’s goal is to provide consistency in climate related risk disclosures.
When asked how to harmonize global climate risks disclosure standards, Gensler said part of it comes from the various frameworks that currently exist such as TCFD. He added that part of it also comes from issuers and investors connecting daily to make sure disclosures are harmonized.
When asked what the penalty would be for not disclosing climate related risks, Gensler did not answer and simply said the Commission would like to get through the proposal first.
For more information on this hearing, please click here.
For an archive of past SIFMA hearing coverage, please click here.