Corporate Governance Business Roundtable Urges SEC to Revise Climate Disclosure Rule

Jun 17, 2022

Washington - Business Roundtable today filed comments in response to the U.S. Securities and Exchange Commission (SEC) “Enhancement and Standardization of Climate-Related Disclosures for Investors” proposed rule.

“Business Roundtable members, who are industry leaders in climate change action and disclosure, have serious concerns with the SEC’s proposal,” said Business Roundtable CEO Joshua Bolten. “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.”

In the submission, Business Roundtable said:

“While Business Roundtable supports efforts to enhance climate-related disclosure, we believe 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. Among other concerns, the Proposal would require registrants to produce overwhelming amounts of information that would not be comparable, reliable or meaningful, much less material, for investors. The Proposal would also subject registrants to significant liability for disclosures that inherently involve a high degree of uncertainty. For these reasons, as well as those laid out below, we urge the SEC to publish a revised proposal addressing these concerns for further comment.”
“… Our members include some of the best in class when it comes to climate disclosure. An overwhelming majority have governance structures in place to oversee climate risks, have integrated climate considerations into their risk management and Board processes, and report Scope 1 and Scope 2 emissions as well as, to some degree, Scope 3 emissions.” 
“The high bar our members have set for voluntary ESG disclosures has helped drive broad improvement in the field and is providing more valuable information for investors.”

The full comments are available here. Business Roundtable identified the following key concerns:

  • The Proposal fails to acknowledge or address the increased liability risk the new disclosure requirements would generate;
  • The proposed Regulation S-X financial reporting requirements are unworkable;
  • The proposed Scope 3 GHG emissions disclosure requirements are overly burdensome and unlikely to result in comparable, investor-useful information;
  • The Proposal would require an overwhelming amount of disclosure that is not tied to materiality, would not provide useful information for investors, and could result in disclosure of sensitive information and/or could chill development of best practices;
  • The Proposal presents significant implementation challenges; and
  • The Proposal’s cost-benefit analysis is fundamentally flawed and significantly understates the ultimate compliance costs of the rules.