US Business Leaders Oppose SEC’s Proposed Climate Disclosure Rules
The U.S. Security and Exchange Commission’s (SEC) proposed rules requiring businesses to provide disclosure on the climate risks facing their companies and on their greenhouse gas (GHG) emissions are “unworkable,” too costly and onerous, according to leading CEO group Business Roundtable.
Business Roundtable is an association of CEOs representing many of the largest companies in the U.S. The group is chaired by General Motors CEO Mary Barra, and its board of Directors s comprised of the chief executives of 25 leading companies including Apple, JPMorgan Chase, Citi, United Airlines, and Walmart.
The SEC unveiled its proposed climate related disclosure rules in March of this year, which would for the first time require U.S. companies to provide information on climate risks facing their businesses, and plans to address those risks, along with metrics detailing the companies’ climate footprint including Scope 1, 2 and in some cases Scope 3 GHG emissions.
The proposals were initially opened to a 60-day comment period, which was later extended until June 17. Business Roundtable submitted its comments to the SEC, expressing support for the Commission’s efforts to enhance climate-related disclosure, but highlighting several key objections to the proposals. In its comments, the group said that it believes that “a number of key provisions in the Proposal, as drafted, are unworkable and would impose requirements that could not be satisfied in the manner and timeframe proposed, and may not result in decision-useful information for investors.”
Some of the key concerns highlighted by the group include the increased liability risk created by the requirement to provide disclosures that involve a high degree of uncertainty, the “overly burdensome” nature of Scope 3 GHG emissions disclosure, requirements for “an overwhelming amount of disclosure that is not tied to materiality,” and the high cost of compliance with the new rules.
The SEC has released estimates for complying with its proposed rules, predicting first year costs at $640,000, and annual ongoing costs for issuers at $530,000. In its comments to the SEC, the Business Roundtable said, however, that the “Proposal’s cost-benefit analysis is fundamentally flawed and significantly understates the ultimate compliance costs of the rules.”
Business Roundtable CEO Joshua Bolten, said:
“Business Roundtable members, who are industry leaders in climate change action and disclosure, have serious concerns with the SEC’s proposal. Key provisions of the current proposal are unworkable and would not produce information that is comparable, reliable or meaningful for investors. We urge the SEC to revise and repropose the rule.”