Today, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, released this statement following the Securities and Exchange Commission's (SEC) latest approval of the agency’s climate disclosure rule. This rule directs public companies to disclose key details about their role in driving climate change and the threat that warming poses to their operations, but it represents a significant step back from what the SEC initially proposed.
“While I welcome the SEC’s latest step towards creating a framework for standardized disclosures on climate-related risks and emissions, it is deeply disappointing that Chair Gensler’s proposal falls short of what was expected by investors, advocates, and others interested in the future of our planet.
“Climate-related financial risk and the resulting financial crisis are not a hypothetical concern. We are experiencing a crisis in real time, and homeowners and renters are paying the price. As the climate crisis intensifies, insurance markets have begun to malfunction. People across the country are suffering from insurance company withdrawals, premium spikes, cancellations, and other restrictions on coverage. Both Congress and investors need consistent and reliable data to gain a better understanding of how the climate driven insurance crisis is spreading risks to the financial system. We also continue to see big banks doubling down on the financing of greenhouse gas industries without disclosing how climate risks would impact their safety and soundness. Unfortunately, under this rule, publicly traded insurance companies and banks that are currently feeling the impacts of the climate crisis—and passing that cost along to their customers—would be permitted to continue to stick their heads in the sand about climate risk.
“It is a privilege for companies to use our capital markets. In return for this privilege, they are required to provide information that investors, working families, retirees, and others need to decide whether to invest in the company, or how to exercise their shareholder rights, or even whether to patronize the goods and services offered by such company. The provision of this information, and the effective enforcement of disclosure rules, is the bedrock of our capital markets, upon which investor and stakeholder confidence rests. The climate proposal could have strengthened our corporate transparency and accountability around climate risk by requiring SEC-reporting companies to disclose their Scope 1, 2, and 3 greenhouse gas emissions, and imposed meaningful requirements on companies to explain the risk they are facing with climate change. Instead, the rule will set a low Federal disclosure standard, while states and other jurisdictions are building robust disclosure frameworks.
“Ensuring effective climate disclosures is a top priority for Democrats and I will continue making sure the SEC, under the current leadership and beyond, fills these glaring regulatory gaps.”
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