The Securities and Exchange Commission (SEC), during the Biden Administration, sought to add “climate disclosure” to the growing list of compliance demands for public companies. This obtuse policy was derided by some as turning the SEC into the Securities and Environment Commission.
Climate Disclosure, falling under the broader social strategy of ESG policies, would have saddled firms with an unknown degree of compliance cost, as firms would have struggled to provide the amorphous information. Even worse, the rules would have rolled down to private firms, as reporting companies would have sought to gather data from vendors and partners. In the end, it would have driven even more companies to remain private, further damaging public markets.
This past week, the SEC, under the leadership of Chairman Paul Atkins, announced a proposed rescission of the silly climate rules.
Chair Atkins stated:
“SEC disclosure obligations should comply with the Commission’s statutory authority, be guided by materiality as the North Star, avoid the practical effect of dictating corporate behavior, and be imposed only when the expected benefits justify the likely costs and burdens.”
The Commission stated that it was redirecting its efforts to its core mandates and away from extreme social policies.
The SEC aims to rescind in its entirety the Climate Disclosure rules as follows:
- They are unnecessary and inconsistent with a registrant-specific, materiality-based approach to disclosure that best serves the interests of registrants and investors.
- They stray well beyond the policy concerns of the federal securities laws.
- They impose substantial costs on public companies and their shareholders that are not justified by the informational benefits they may provide to some investors.
- They are at odds with the Commission’s policy objectives of facilitating capital formation and promoting public company status.
A comment period of 60 days will be part of the process, following publication in the Federal Register.