The Senate Banking Committee is slated to hold a March 18, 2021, hearing on the systemic financial risks posed by climate change. The hearing comes as Democratic lawmakers and others push to bring tougher rules and greater scrutiny to corporate disclosures on environmental, social, and governance (ESG) matters.
Five witness are lined up to testify: Nathaniel Keohane, senior vice president, climate, at the Environmental Defense Fund; Marilyn Waite, Climate and Clean Energy Finance Program officer at the William and Flora Hewlett Foundation; John Cochrane, senior fellow at Stanford University’s Hoover Institution; Benjamin Zycher, resident scholar at the American Enterprise Institute; Gregory Gelzinis, associate director for economic policy at the Center for American Progress.
The Senate Banking Committee earlier this month questioned Gary Gensler, President Joe Biden’s pick to head the SEC, on his support for expanding climate risk disclosures. Gensler, former chairman of the Commodity Futures Trading Commission (CFTC), indicated he would support such a rulemaking, noting that investors increasingly want to see the information.
“I think issuers would benefit from such guidance, so I think through good economic analysis, working with the staff, putting out to the public to get public feedback on this, this is something that the commission, if I’m confirmed, I’d work on,” he told the panel.
The SEC last issued climate guidance in 2010 in Release No. 33-9106, Commission Guidance Regarding Disclosure Related to Climate Change. In the guidance, the commission said companies should inform investors about the risks they face from climate change, including lawsuits, business problems, regulatory supervision, or international treaties. The significant effects of climate change, such as severe weather, rising sea levels, loss of farmland, and the declining availability and quality of water, have the potential to affect a public company’s operations and financial results and should be disclosed.
Acting SEC Chair Allison Herren Lee, in a February statement, said SEC staff will begin work on updating the 2010 guidance in Release No. 33-9106, and will more closely scrutinize climate disclosures companies are already making. The SEC under Lee also launched the Climate and ESG Task Force in the Division of Enforcement.
