The U.S. Chamber of Commerce has urged the Securities and Exchange Commission to proceed cautiously on climate risk disclosure, saying enforcement efforts should not take precedence over rulemaking.
In a letter to Acting SEC Chair Allison Herren Lee, the Chamber suggested the commission had acted prematurely in announcing earlier this month that it had formed a new Climate and ESG Task Force to step up enforcement of disclosure of climate risks.
“The Chamber urges caution regarding the SEC’s recently-announced ESG enforcement initiative,” Executive Vice President Tom Quaadman wrote, noting that it “appears to take an enforcement-first approach to ESG and climate change even though the commission has not yet completed its review and updates to the 2010 guidance regarding climate change disclosures.”
“We are deeply concerned that using the SEC’s enforcement apparatus in place of notice-and-comment rulemaking will discourage companies from going public just as the economy turns its sights onto recovery from the pandemic through capital formation and job creation,” he said.
According to the SEC, which has been under pressure from Democratic lawmakers, environmentalists, and advocates for tougher financial rules to boost scrutiny of climate disclosure compliance, the task force will “develop initiatives to proactively identify ESG-related misconduct.”
The Chamber’s letter echoes the concerns of two Republican commissioners who said it might be “more prudent for us to await the results of the Corporation Finance staff’s latest review of climate change-related disclosure” before allocating resources to a task force.
As part of its Project for Growth and Opportunity, the Chamber of Commerce has been urging companies to voluntarily disclose material details about their environmental and social efforts. It has also released ESG-reporting best practices for corporations to use as a guide when compiling their disclosures.
“The Chamber … strongly believes that any public policy approach to ESG reporting must be rooted in the Supreme Court’s well-established concept of materiality,” Quaadman said.
Disclosures, he added, “should be used to protect investors and should not be used as a means to achieve policy goals outside the scope of the federal securities laws.”
(Photo by Justin Sullivan/Getty Images)