September 27, 2023

Warren, Tlaib, Raskin, Schiff Lead 23 Lawmakers Urging SEC to Release Strong Climate Risk Disclosure Rule

SEC Expected to Finalize Rule in October

Text of Letter (PDF)

Washington, D.C. – U.S. Senator Elizabeth Warren (D-Mass), a member of the Senate Banking, Housing, and Urban Affairs Committee and U.S. Representatives Rashida Tlaib (D-Mich.), Jamie Raskin (D-Md.), and Adam Schiff (D-Calif.) led 23 of their colleagues in a letter to Securities and Exchange Commission (SEC) Chair Gary Gensler, urging the SEC to quickly release a final, strong climate disclosure rule.  The SEC’s regulatory agenda suggests it will finalize the rule in October 2023.

Senators Sherrod Brown (D-Ohio), Chair of the Senate Banking, Housing, and Urban Affairs Committee, Tina Smith (D-Minn.), Brian Schatz (D-Hawaii), Ed Markey (D-Mass.), Cory Booker (D-N.J.), Bernie Sanders (I-Vt.), Sheldon Whitehouse (D-R.I.), and Peter Welch (D-Vt.) and Representatives Ayanna Pressley (D-Mass.), Emmanuel Cleaver (D-Mo.), Eleanor Holmes Norton (D-D.C.), Jared Huffman (D-Calif.), Seth Magaziner (D-R.I.), James McGovern (D-Mass.), Katie Porter (D-Calif.), Jamaal Bowman (D-N.Y.), Ro Khanna (D-Calif.), Jan Schakowsky (D-Ill.), Nannette Diaz Barragán (D-Calif.), Yvette Clarke (D-N.Y.), Cori Bush (D-MO), Barbara Lee (D-Calif.), and Bonnie Watson Coleman (D-N.J.) signed the letter.

“We are writing to once again urge you to expeditiously release a final, strong climate disclosure rule that results in detailed disclosure of firms’ transition risk and opportunities, including Scope 1, 2, and 3 greenhouse gas (GHG) emissions, details around energy transition plans, and capital expenditures related to the transition… Finalizing a rule without these components could create a regulatory greenlight for public companies to disclose misleading GHG and transition plan information that systematically understates their transition risks,” wrote the lawmakers. 

The lawmakers note that many legal experts have affirmed the SEC’s authority to promulgate a climate risk disclosure rule, and that there is broad support for their suggested provisions. Of institutional investors with more than $50 trillion assets under management collectively, 99% support Scopes 1 and 2 disclosure, 97% support Scope 3 disclosure in the same form as the Commission proposed, and 95% support disclosure of climate-related targets and goals.

The lawmakers also reiterated the importance of including Scope 3 emissions in the final climate risk disclosure rule, noting that these are central to credible climate-related risk reporting for certain sectors and companies such as publicly-traded private equity firms, which seem particularly prone to presenting misleading climate-related claims to investors.

“Troublingly, recent reports have found significant inadequacies in financial firms’ climate-related disclosures, particularly around financed GHG emissions and emissions reduction commitments, bolstering the case for finalizing the rule as proposed and requiring immediate attention by SEC,” continued the lawmakers. “Scope 3 financed emissions are…on average…more than 700 times larger than the reporting entity’s direct emissions according to one study—but many such firms are currently presenting misleading information to investors by failing to report climate risks associated with debt and equity investments.”

Given these concerns, the lawmakers are calling on the SEC to include Scope 1, 2, and 3 greenhouse gas emissions, details around net-zero transition plans, and capital expenditures made towards the transition in its final climate risk disclosure rule to fulfill its mandate to protect investors.

Senator Warren has long fought to push financial regulators to act on climate and climate financial risk:

  • In September 2023, Senators Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Martin Heinrich (D-N.M.), Ed Markey (D-Mass.), Sheldon Whitehouse (D-R.I.), and Jeff Merkley (D-Ore.) sent a letter to Secretary of the Treasury Janet Yellen and newly-appointed Treasury Climate Counselor Ethan Zindler, urging the Treasury Department (Treasury) to take key actions pertaining to climate and climate-related financial risk to avert the impending environmental and economic crises.
  • In September 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren urged Chair Gensler to quickly finalize a strong climate risk disclosure rule, reminding him that he has a mandate to protect investors and strong public support.
  • In September 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren highlighted the recent withdrawals of major insurance companies from states that have a high and growing  risk of climate disasters, the impact of this insurance crisis on homeowners, and the need for increased transparency from insurance companies.
  • In September 2023, Senators Warren, Chris Van Hollen (D-Md.), and Whitehouse sent a letter to Secretary Yellen and Federal Insurance Office (FIO) Director Steven Seitz calling on the FIO to finalize its proposal to collect data from major insurers to better assess the impact of climate change on insurance availability and affordability, including in communities that are most vulnerable to the effects of climate change.
  • In March 2023, Senators Warren, Whitehouse, and Markey sent a letter to Secretary Yellen following Climate Counselor John Morton’s departure and urging Treasury to take swift and aggressive action to tackle the climate crisis, which threatens our health, security, and financial system. 
  • In March 2023, Senators Warren, Whitehouse, and Representatives Dan Goldman (D-N.Y.) and Raskin and 47 of their colleagues sent a letter to SEC Chair  Gary Gensler, urging him to protect investors and finalize a strong climate disclosure rule without further delay.
  • 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 Brian Schatz (D-Hawaii) 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 Whitehouse and Schatz 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 August 2021, Senators Warren, Kirsten Gillibrand (D-N.Y.), and Chris Van Hollen (D-Md.) sent a letter to John Morton – the first Climate Counselor at the new Climate Hub at the U.S. Department of the Treasury – urging swift and aggressive action to tackle the climate crisis, a major threat to the country’s health, security, and financial system.
  • In May 2021, Senator Warren and Congressman Andy Levin (D-Mich.) introduced the Buy Green Act to use the enormous breadth of U.S. federal procurement to help fight the climate crisis, spur innovation, and boost demand for American-made clean energy products at home and in the rapidly-growing markets for green products abroad.
  • In May 2021, Senator Warren and Congressman Levin introduced the National Institutes of Clean Energy Act of 2021, legislation that would invest $400 billion over the next ten years to establish and operate a new system of institutes at the Department of Energy dedicated to research and development (R&D) of advanced clean energy technologies.
  • In April 2021, Senator Warren and Representative Sean Casten (D-Ill.) reintroduced the Climate Risk Disclosure Act of 2021 which would reduce the chances of environmental and financial catastrophe by requiring public companies to disclose more information about their exposure to climate-related risks.
  • In March 2021, Senator Warren unveiled the BUILD GREEN Infrastructure and Jobs Act which would invest $500 billion over ten years in state, local, and tribal projects to jumpstart the transition to all electric public vehicles and rail and help modernize the nation's crumbling infrastructure. 

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