March 06, 2023

Senators Warren, Whitehouse, Representatives Goldman, Raskin, and 47 Colleagues Urge SEC to Finalize Strong Climate Risk Disclosure Rule, Protect Investors

SEC Reportedly Considering Dialing Back Proposed Climate Disclosure Rule “Investors Need Reliable Information about Climate Risks to Make Informed Investment Decisions”

Text of Letter (PDF)

Washington, D.C. – U.S. Senators Elizabeth Warren (D-Mass.), Sheldon Whitehouse (D-R.I.), and Representatives Dan Goldman (D-N.Y.) and Jamie Raskin (D-Md.) and 47 of their colleagues sent a letter to Securities and Exchange Commission (SEC) Chairman Gary Gensler, urging him to protect investors and finalize a strong climate disclosure rule without further delay. The rule would require public companies to disclose details about their emissions and climate-related risks. 

“Climate risk disclosure is key to the SEC’s mission of ‘protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation,’” wrote the lawmakers. “The climate crisis and the clean energy transition are ‘two of the most significant, if not the most significant, factors in the performance of individual firms, markets, and the economy as a whole.’”

Nearly one year ago, in March 2022, the SEC released a draft of the climate disclosure rule, requiring registrants to include certain climate-related disclosures in their SEC registration statements and periodic reports. Several sources have recently reported that the SEC is “considering scaling back” the scope of the rule following intense opposition from corporate America. 

“The SEC needs to stand up to the barrage of corporate lobbying thrown at it and issue a strong climate risk disclosure rule that includes comprehensive reporting requirements, without any more delay,” said Senator Elizabeth Warren. “A watered-down climate risk disclosure rule would be a failure of the SEC’s duty to protect investors.” 

“The proposed rule was finally released in March 2022, the comment period closed in June 2022,  and you have had eight months since then to review the comments,” concluded the lawmakers. “This rule has already been delayed enough – and after that long delay, SEC would be failing its duty to protect investors if it issues a watered-down rule missing key reporting requirements from large public companies that investors want and need.”

The letter expresses particular concern that the SEC may weaken or altogether drop “Scope 3” emissions disclosure requirements from the final rule, enabling many companies to hide the vast majority of their exposure to climate risk from regulators and investors.

“My colleagues and I are calling on the SEC to require the most rigorous climate risk reporting from companies about their supply chains because we should lead the world in defining climate disclosures and protecting investors, not lag behind other countries,” said Representative Dan Goldman. “The SEC has an obligation to protect investors, and we must ensure the utmost transparency on climate risk information.”

“Big Oil and many of the largest corporations are campaigning against the SEC’s climate risk disclosure rule because they know how risky it is to invest in climate pollution,” said David Shadburn, Government Affairs Advocate for the League of Conservation Voters. “The SEC’s mission is to protect investors from financial risks, not wealthy corporations from scrutiny. It is critical that the SEC heeds the call from investors and finalizes a strong climate risk disclosure rule, including comprehensive scope 3 reporting. Thank you to Senators Warren and Whitehouse and Representative Goldman and Raskin for leading this important effort.”

“Investors have made it clear that they cannot fully understand a company's transition risk without information about its absolute gross Scope 1, 2, and 3 emissions,” said Alex Martin, Sr. Policy Analyst at Americans for Financial Reform. “And global standard-setters are quickly converging on a framework that will deliver this critical information in capital markets around the world. If the SEC enacts a less rigorous disclosure regime, the U.S. capital markets will be less fair, and U.S. investors less protected, due to this significant shortcoming.”

Along with Senators Warren and Whitehouse and Representatives Goldman and Raskin, the letter was also signed by Senators Martin Heinrich (D-N.M.), Ed Markey (D-Mass.), Bernie Sanders (I-Vt.), Jeff Merkley (D-Ore.), Tina Smith (D-Minn.), and Cory Booker (D-N.J.) and Representatives Nannette Diaz Barragán (D-Calif.), Emmanuel Cleaver (D-Mo.), Yvette Clarke (D-N.Y.), Salud Carbajal (D-Calif.), Jerrold Nadler (D-N.Y.), Katie Porter (D-Calif.), Doris Matsui (D-Calif.), Jared Huffman (D-Calif.), Eleanor Holmes Norton (D-D.C.), Ayanna Pressley (D-Mass.), Raúl Grijalva (D-Ariz.), Barbara Lee (D-Calif.), Rashida Tlaib (D-Mich.), Ilhan Omar (D-Minn.), Dwight Evans (D-Penn.), Ro Khanna (D-Calif.), Suzanne Bonamici (D-Ore.), Adam Smith (D-Wash.), Mike Levin (D-Calif.), Adriano Espaillat (D-N.Y.), Troy Carter (D-La.), Bonnie Watson Coleman (D-N.J.), Pramila Jayapal (D-Wash.), Dutch Ruppersberger (D-Md.), Nydia Velázquez (D-N.Y.), Greg Casar (D-Texas), Seth Magaziner (D-R.I.), Mark DeSauliner (D-Calif.), Jasmine Crockett (D-Texas), Betty McCollum (D-Minn.), Robert Garcia (D-Calif.), Al Green (D-Texas), Frederica Wilson (D-Fla.), James McGovern (D-Mass.), Jesús “Chuy” García (D-Ill.), Madeleine Dean (D-Penn.), Jill Tokuda (D-Hawaii), Brendan Boyle (D-Penn.), Jan Schakowsky (D-Ill.), Henry “Hank” Johnson (D-Ga.), and Greg Landsman (D-Ohio).

Senator Warren has led the push for the SEC to issue a strong climate risk disclosure rule: 

  • In September 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called on SEC Chair Gary Gensler to protect investors and stand up to fossil fuel lobbying by issuing a strong climate risk disclosure rule quickly.
  • In June 2022, Senator Warren led a comment letter with Senators Whitehouse and Schatz on the SEC’s mandatory climate disclosure rule, highlighting several areas for improvement and key elements that the SEC should preserve in its final rule, including strong Scope 3 emissions disclosure requirements.
  • In March 2022, Senator Warren led a letter with Senators Sheldon Whitehouse (D-R.I.) and Brian Schatz (D-Hawaii) urging the SEC to require disclosure of anti-climate lobbying activities in the Commission’s rule.
  • In February 2022, Senator Warren led a letter to the SEC about the delayed release of the SEC’s proposed climate change disclosure rule, urging them to act quickly to get a rule out.
  • In April 2021, Senator Warren reintroduced the Climate Risk Disclosure Act, directing the SEC to require disclosure of climate change-related risks, including a company’s strategies and actions to mitigate these risks.