Republicans are accusing the Securities and Exchange Commission of stonewalling after they requested records related to a proposed rule that would compel companies to disclose climate-related risks.
In a Thursday letter to SEC Chairman Gary Gensler, GOP members of the Senate Banking Committee excoriated him and his staff for failing to provide answers to a series of written questions about the proposed rule. They also said he would not provide the committee with the various records they requested.
The senators sent the initial letter to Gensler on June 15 and requested the answers and records by a June 29 deadline. The lawmakers said that Gensler missed the deadline, and then when he finally did respond, sent a “perfunctory one-page response that included none of the answers or records requested.”
“We are troubled by the Securities and Exchange Commission’s (SEC) lack of transparency and disregard for a significant congressional oversight request concerning the SEC’s proposed climate disclosure rule,” the GOP senators wrote, adding that his response was “wholly inadequate and unacceptable.”
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The senators said that some of the questions could have been answered by simple one-word responses such as “yes” or “no,” but Gensler did not do so.
“Has the SEC considered the impact that the proposed climate disclosure rule would have on energy prices and any other costs associated with the rule?” was one of the questions. Another question was: “Has the SEC coordinated with any other Federal agencies on the policies contained in the proposed climate disclosure rule?”
The rule in question was proposed in March and has been met with fierce industry and GOP resistance. It creates guidelines for how and what companies must report to investors about how their operations affect the climate. The rule stipulates that companies must report direct and indirect greenhouse gas emissions, audited by an outside party.
“Companies and investors alike would benefit from the clear rules of the road proposed in this release,” Gensler said around the time the rule was proposed.
Self-reporting of climate information has already become par for the course in business as investors increasingly embrace environmental, social, and governance standards, although the rule seeks to codify the practice and provide uniformity.
The SEC classifies corporate emissions into three categories called scopes. Scope one is a company’s direct emissions, scope two refers to its indirect emissions (such as those involved in the use of electricity), and scope three measures emissions from other entities, such as suppliers or customers along a company’s value chain.
Under the SEC’s proposed rule, the scope three reporting requirement, the most divisive, is set to be phased in gradually and includes carveouts based on the size of a company. Scope three disclosures would also just apply to companies that consider such emissions to be “material” to investors.
In the Thursday letter to Gensler, the Republicans further dinged him for saying that SEC staff could provide a briefing for them, something that they said was never mentioned.
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“This response is particularly disappointing because, on July 6, 2022, Senate Banking Committee (Committee) staff made clear to SEC staff that a briefing is not a substitute for providing written answers and records,” they wrote.
The lawmakers further reiterated that they want Gensler and the SEC to provide answers to the questions they asked and preserve all records related to the 500-page climate disclosure rule.
