Regulatory Briefing: Fresh objections to the SEC’s climate disclosures

More objections to the US Securities and Exchange Commission’s proposals for mandatory climate disclosure rules are surfacing as sector advocacy groups publish their formal submissions to the agency’s consultation, which closed on 17 June. 

The Bank Policy Institute, an advocacy and policy organisation representing major US banks, complains of an overly prescriptive approach that could undermine the goal of providing useful information to investors. Further, the proposal fails to account for the interaction with the prudential bank regulatory framework, says the BPI.

“The proposal’s overly detailed requirements would lead to a mountain of information that would be misleading and of little use to investors. This is particularly the case given the significant limits of climate data today,” it claims.

In a similar vein, the Insurance Information Institute states that “creating a new layer of federal oversight would neither enhance nor standardise the climate-related disclosures US insurers make to investors”.

Meanwhile, the State Financial Officers Foundation, which has a number of blue-chip asset managers as sponsors, has told the SEC that it is not a climate regulator and that its new rule would lie outside the scope of its responsibilities. In addition, the proposal violates the First Amendment, because it will force issuers “to speak extensively to businesses about their impacts to climate change”.

However, some finance community bodies – especially those with a global perspective – are open to the proposals. The Institute of International Banking, which represents internationally headquartered financial institutions from more than 35 countries, has urged the SEC to require climate disclosures. It argues the regulator should initially limit their scope, build on established frameworks and mitigate the litigation disclosure risk for firms.