The Securities and Exchange Commission is reportedly considering easing a proposed rule that would compel companies to disclose
climate-related
risks, a sign that some of the pushback might be working.
The
SEC
is reconsidering just how stringent the reporting requirement will be, the Wall Street Journal
reported
on Friday, citing people close to the agency. The final version of the rule is still expected to require climate disclosures from companies, although the SEC might update the rules to raise the threshold for reporting.
The rule was first proposed last March and creates guidelines for how and what companies must report to investors about how their operations affect the climate. It says companies must report direct and indirect greenhouse gas emissions — reports that would be audited by an outside party.
Self-reporting of climate information has already become commonplace in business as investors increasingly embrace environmental, social, and governance standards, known as
ESG
, although this proposal would take the trend a step further by imposing reporting requirements.
TWENTY-FIVE STATE ATTORNEYS GENERAL SUE TO STOP BIDEN ADMINISTRATION ESG RULE
The proposed rule is part of President Joe Biden’s broader climate agenda, which envisions cutting greenhouse gas emissions by more than half by the end of the decade when compared to 2005 levels.
Republicans have pushed back voraciously against the idea and against SEC Chairman Gary Gensler, who will likely face questions from Congress this year now that Republicans have taken control of the House and can hold hearings.
The Labor Department has also written a rule that would allow retirement plan managers to weigh ESG when making investments, a reversal of Trump-era rules restricting such considerations on the grounds that they don’t prioritize investor returns.
ESG proponents argue that is a way that finance and business can help reform society, such as by mitigating the negative effects of climate change. Those who oppose ESG say it distorts the economy and even America’s culture.
Attorneys general from 25 states filed a lawsuit against the Biden administration last month over the plan to allow retirement fund managers to consider ESG. The lawsuit, filed in Texas federal court, sought a preliminary injunction to stop the rule from going into effect on Jan. 30.
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Also last month, GOP West Virginia Treasurer Riley Moore introduced legislation to require the state’s investment boards to cast proxy votes based on the financial interests of pensioners and taxpayers, not ESG factors.
Gov. Ron DeSantis (R-FL) additionally approved a measure prohibiting state-run fund managers in Florida from considering ESG factors when making investments.
