Gensler was referencing climate disclosure rules out of Europe that will take effect in January. The European Sustainability Reporting Standards (ESRS) were issued under the EU's Corporate Sustainability Reporting Directive that requires large companies and companies listed in Europe to regularly report on their social and environmental risks and impacts, and how those affect companies financially.
A U.S. climate disclosure rule would allow U.S. public companies that do business in Europe to tell European regulators that they're in compliance with U.S. rules, Gensler said. "They have a different law and we are not solving for their law, we're solving for U.S. capital markets, U.S. disclosure regimes and only the authorities that Congress has given us," he added. "Well, that's the goal."
The SEC unveiled its climate disclosure rule, which has broad backing from institutional investors and asset managers, in March 2022. The rule would require public companies to provide a host of climate-related information in their periodic reports and registration statements.
The requirement that received the most significant debate in the proposal's comment period, which ended in June 2022 and has drawn roughly 16,000 comments, centers on greenhouse gas emission disclosures. Under the proposal, public companies would be required to disclose the greenhouse gas emissions they generate or purchase, and the indirect emissions generated from a company's supply chain, if material, though smaller companies would be exempt from the latter requirement, referred to as Scope 3.
The Chamber, in its comment letter, suggested Scope 3 disclosures should be entirely voluntary.
The agency has yet to finalize the rule and Gensler on Oct. 26 declined to provide an update on its timeline.
At the event, Gensler said, "I think that your corporate members … you may not have written this in your letters, but I think you want us to be successful. I think that it will benefit the capital markets that the U.S ... securities regulator has something more than our 2010 guidance on this. The investor side, almost uniformly, wants some consistency around this disclosure."
In 2010, the SEC issued interpretative guidance outlining how the agency's existing principles-based disclosure requirements apply to climate change matters.
Like he has in many public appearances over the last 14 or so months, Gensler said that a majority of the top public companies are already disclosing some climate-related information, but there's no uniformity.
With its proposal, the SEC is trying to bring "some consistency and comparability" to climate disclosures, "and that drives efficiency in capital markets because then investors get something consistent," Gensler said.
