The Securities and Exchange Commission (SEC), Investor Advisory Committee (IAC) has scheduled a meeting for September 21st. According to the Sunshine Act Notice, the IAC will be discussing Climate Disclosure along with a recommendation made by the Committee.
Currently, the SEC is proposing new rules under its ESG initiative to compel publicly traded firms to disclose climate impact along with their other mandated filings. These new rules have received considerable criticism from certain sectors of the financial services industry as punitive and unwieldy.
Small business expert and Senior Fellow, Economic Policy at the Heritage Foundation, David Burton, submitted a comment on the proposal slamming the SECs move:
“Climate Change Disclosure Requirements Would Have No Meaningful Impact on the Climate. The information elicited by the rule, especially scope 3 reporting, will be extraordinarily unreliable and built on a speculative house of cards that would raise fraud issues in any other context. It strains credibility to believe that including this unreliable, immaterial information in financial statement footnotes and other disclosure documents is going to have a significant impact on the climate. The only way that this disclosure will have even the slightest impact is if the disclosure is weaponized by a highly politicized SEC that launches enforcement action after enforcement action against disfavored industries seeking billions of dollars in fines (nominally for disclosure violations) in an effort to drive them from conventional fuel use.”
Many others have echoed Burton’s sentiments.
The SEC’s Small Business Capital Formation Advisory Committee (SBCFAC) has warned the SEC that these new rules will likely discourage firms from going public.
Others have pointed to the arbitrary nature of the disclosure along with the fact it will trickle down to private firms as public firms attempt to figure out their collective climate impact.
While there are solid arguments for the SEC to veer from adding more disclosure for public firms, the current makeup of the Commission has shown a streek to adhere to political decisions regardless of the economic impact.
Along with climate disclosure, the other topics to be addressed include:
- a panel discussion human capital management labor valuation and performance data;
- a panel discussion regarding proposed rule 10b-1 position reporting of large security-based swap positions / asset-based swaps;
- a panel discussion regarding schedules 13d and 13g beneficial ownership reports;
- a panel discussion regarding ESG fund disclosure; a discussion of a recommendation on cybersecurity disclosure; a discussion of a recommendation on climate disclosure;
- a discussion of a recommendation on accounting modernization;
- subcommittee reports; and a non-public administrative session.
A complete agenda should be available prior to the meeting.
The IAC meeting will be live-streamed and available to the public. The meeting commences at 10AM ET on September 21, 2022.