“It really pares back the regulation to focus on a narrow set of companies that are primarily heavy industry, like cement, that are consuming a lot of electricity,” said Austin Whitman, CEO of The Change Climate Project. “[This rule] even lets oil and gas off the hook.”
Political challenges
The SEC’s rule creates something of a lowest common denominator when compared with climate-related disclosure requirements in the EU and California, or voluntary disclosure requirements laid out by the Task Force on Climate-Related Financial Disclosures or the International Sustainability Standards Board.
But it also reflects the unique political environment within the U.S., where climate change has become a deeply divisive issue. The rule is likely to be challenged in the courts by its conservative opponents, Cramer noted, and dropping certain requirements is likely a strategic move on the part of the SEC’s Democratic majority to protect it from potential legal challenges.
“So much of these rule-making processes reflect the politics of climate change, generally,” Whitman said. “We’ve gotten to a point where people are arguing that the EPA can’t regulate greenhouse gas emissions and the SEC can’t regulate financial risk. What the hell’s the point of government?”
SEC commissioners Hester Peirce and Mark Uyeda, both Republicans, voted against the rule, while Democratic commissioners Caroline Crenshaw and Jaime Lizárraga and SEC chair Gary Gensler voted in support, ultimately passing it on to the Federal Register.
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