SEC Climate Disclosure Rules Find Republican Opposition in Both Houses

Reps. Bill Huizenga, R-Michigan, and Andy Barr, R-Kentucky, introduced legislation today that would prevent the SEC from requiring securities issuers to make disclosures about carbon emissions, unless the information is likely to be material to an investor. The bill is the Mandatory Materiality Requirement Act.

Huizenga and Barr are ranking members of subcommittees of the U.S. House Committee on Financial Services.

Though the legislation does not explicitly mention items such as “climate,” “environment” or “greenhouse gas,” it would amend both the Securities Act of 1933 and the Securities Exchange Act of 1934 to require that any disclosure mandated by the SEC is material for investors’ investment decisions. It is intended to pre-empt an SEC proposal from March that public companies provide certain climate-related financial data and information on greenhouse gas emissions in their public disclosure filings.

Barr explained: “I am proud to be an original co-sponsor of the Mandatory Materiality Requirement Act in the House to ensure that the SEC is sticking to its statutory mandate and commend Representative Huizenga and Senator [Mike] Rounds [R-South Dakota,] for helping to lead the charge against woke climate policy in our financial markets and institutions.”

Rounds introduced similar legislation in September. That bill, which carries the same name, likewise does not make explicit mention of “climate,”, “environment,” or “greenhouse gas.” However, the bill has the same stated intent as its House companion, Rounds explained in a press release: “American businesses should not be used as a gateway to advance climate-change policy.”

In March, the SEC proposed a rule that would require public companies to disclose information about their “climate-related risks that are reasonably likely to have a material impact on their business.” The proposal would require public companies to disclose information about direct greenhouse gas emissions, indirect emissions produced as a result of electricity consumption and emissions from its supply chain. This rule has not been finalized and is not in effect.

Another related bill, proposed Monday by Senator John Boozman, R-Arkansas, called the Protect Farmers from the SEC Act, specifically takes aim at the provision to require greenhouse gas emissions to be disclosed by agriculture companies. Boozman’s bill would exempt agriculture companies from any future disclosure requirements. Unlike the other bills, Boozman’s does mention “greenhouse gas” in its text.

Senator Tom Cotton, R-Arkansas, proposed legislation on Thursday that addresses the U.S. Department of Labor regulation that would permit ESG considerations to be used by retirement plan fiduciaries. Cotton’s one-page bill would invalidate the DOL rule without replacing it with other legal guidance. In a press release, Cotton said that retirement plans should avoid, “ESG scams.”