Casten, Vargas, Castor Lead 77 House Democrats to Urge SEC to Finalize Strong and Durable Climate Rule
Washington, D.C. — Today, U.S. Congressman Sean Casten (IL-06), Congressman Juan Vargas (CA-52), and Congresswoman Kathy Castor (FL-14) lead 77 of their colleagues in a letter to SEC Chair Gary Gensler urging the SEC to quickly finalize a strong and durable climate disclosure rule.
“Enhanced climate-related disclosure is the direction of travel for capital markets around the world,” the lawmakers wrote in part. “You have drafted a well-reasoned proposal that is grounded in financial materiality, aligns with the demands of investors and market participants, and is clearly within the SEC’s mission, authorities, long-standing norms, and responsibilities. We urge you to finalize and adopt a credible mandatory disclosure rule as quickly as possible.”
On March 21, the SEC released their long-await proposed rulemaking to require public companies to disclose climate-related information in their SEC filings. If finalized, this would mark the first time public companies are required to report their greenhouse gas emissions, along with details of how climate change impacts their business.
In June of 2022, more than 130 Democrats signed a comment letter, led by Rep. Casten and Rep. Castor, in support of the SEC’s proposed rule on enhanced climate disclosures that would require public companies to disclose climate-related information in their SEC filings.
In addition to Reps. Casten, Castor, and Vargas, the letter was signed by Reps. Alma Adams; Becca Balint; Nanette Barragán; Joyce Beatty; Earl Blumenauer; Suzanne Bonamici; Jamal Bowman; Julia Brownley; Salud Carbajal; Tony Cárdenas; Andre Carson; Troy Carter; Sean Casten; Kathy Castor; Judy Chu; Yvette Clarke; Emanuel Cleaver; Steve Cohen; Jasmine Crockett; Jason Crow; Danny Davis; Diana DeGette; Mark DeSaulnier; Veronica Escobar; Adriano Espaillat; Dwight Evans; Bill Foster; John Garamendi; Jesús García; Al Green; Raúl Grijalva; Val Hoyle; Jared Huffman; Jonathan Jackson; Sara Jacobs; Henry Johnson; Ro Khanna; Raja Krishnamoorthi; Barbara Lee; Mike Levin; Ted Lieu; Stephen Lynch; Seth Magaziner; Doris Matsui; Jennifer McClellan; Betty McCollum; James McGovern; Kevin Mullin; Jerrold Nadler; Eleanor Norton; Alexandria Ocasio-Cortez; Ilhan Omar; Donald Payne; Brittany Pettersen; Mark Pocan; Katie Porter; Ayanna Pressley; Mike Quigley; Jamie Raskin; Deborah Ross; Linda Sánchez; John Sarbanes; Janice Schakowsky; Adam Schiff; Brad Sherman; Adam Smith; Darren Soto; Melanie Stansbury; Haley Stevens; Eric Swalwell; Mark Takano; Paul Tonko; Ritchie Torres; Lori Trahan; David Trone; Lauren Underwood; Nydia Velázquez; Nikema Williams; and Frederica Wilson.
You can find the letter HERE and below:
Dear Chair Gensler
More than a year ago, the Securities and Exchange Commission (SEC) issued a critical proposal to elicit more standardized, reliable climate disclosure from public companies. As climate-related risks continue to grow, investors urgently need access to decision-useful information regarding risks and opportunities that will likely have a material impact on registrants’ business, operations, or financial condition. We commend you for initiating this process and we urge you to quickly finalize a strong and durable rule.
The proposed rule is squarely within the Commission’s authority and mission to protect investors; maintain fair, orderly, and efficient markets; and facilitate the formation of capital. The SEC has “longstanding and indisputable authority to regulate the disclosure practices of public traded companies” to protect markets and market participants. It “has exercised its disclosure authority consistently—and without legislative override” for over ninety years, and “has now done so once more with the Proposal on climate-related disclosure.”
Increasingly frequent and severe extreme weather events have affirmed that climate change poses a significant financial risk, and developments in the past year have strengthened the case for finalizing a strong rule. Physical risk is scaling rapidly, accelerating direct damages and supply chain disruptions that impact public companies’ bottom lines. Last year, the cost of climate and weather disasters in the United States totaled more than $165 billion—the third most costly year on record. These events can materially affect the financial and operational wellbeing of companies around the world, including SEC registrants. The current patchwork of voluntary reporting requirements is inadequate and lacks rigor, consistency, and verifiability.
Further, the European Union is currently implementing its Corporate Sustainability Reporting Directive (CSRD), which will increase climate-related reporting requirements on companies within the EU and those that have substantial activity within the EU. Recent estimates show that thousands of U.S. companies will be required to comply with these CSRD standards.
U.S. capital markets are the envy of the world, and the SEC should lead, not follow, in implementing a strong climate-related disclosure rule. Investors need clear, comparable, and standardized disclosures to judge registrants' climate risks. Further, beyond providing comparability for investors, finalizing a strong ruling will allow the SEC to align its requirements with those of other financial regulators around the world, reducing costs to issuers and providing more useful information to all market participants.
We are not naive to the environment that has unfortunately injected politics into requirements that should not be controversial and will better enable investors to analyze investment risk and return, allocate capital efficiently, and prioritize investment stewardship and engagement. However, this should not be a reason for continued delay.
As opponents of climate action and U.S. leadership continue to make your job more difficult, we are grateful for your unwavering commitment to the interests of U.S. investors and ensuring that U.S. corporations have a partner and voice at the table for international reporting standards.
Enhanced climate-related disclosure is the direction of travel for capital markets around the world. You have drafted a well-reasoned proposal that is grounded in financial materiality, aligns with the demands of investors and market participants, and is clearly within the SEC’s mission, authorities, long-standing norms, and responsibilities. We urge you to finalize and adopt a credible mandatory disclosure rule as quickly as possible.
Sincerely,