The Securities and Exchange Commission should seek more climate risk disclosure from companies, its likely next chairman told the Senate Banking, Housing and Urban Affairs Committee on Tuesday.
During his confirmation hearing, Gary Gensler told the panel he supports more climate risk disclosure, pledging that the SEC will undertake economic analysis and seek public feedback on how to advance it. "There are tens of trillions of investor dollars that are going to be looking for more information about climate risk," he said, adding that "issuers will benefit from such disclosures" as well.
Asked about what companies should be required to disclose in general as issues such as climate risk evolve, Mr. Gensler said, "it's the investor community that gets to decide what is material. I am going to be guided by that."
Questioned on the role of proxy adviser firms and potential conflicts of interest in what some Republicans consider a duopoly, Mr. Gensler said that while he supports competition, proxy advisers provide an important role in the markets. "I think it does bring efficiency to many pension funds to help them through the proxy season … through what otherwise would be a hard slog," he said. He promised to work with SEC staff "to see if there is something that needs to be addressed."
Pressed by Sen. Elizabeth Warren, D-Mass., on private equity firms' disclosure, Mr. Gensler said: "I think it is at the heart of the Investment Advisers Act that they would disclose fees" and business practices to their limited partners.
The SEC under his leadership would also look at ways to crack down on insider trading and safe harbors for corporate executives to sell their holdings, Mr. Gensler said.
Committee Chairman Sherrod Brown, D-Ohio, praised Mr. Gensler's record as former chairman of the Commodity Futures Trading Commission during the global financial crisis and as a senior official in the Treasury Department, where he "delivered results and ensured accountability," Mr. Brown said.
"He led the charge in 2012 to crack down on the big banks that had manipulated interest rates for years, and gotten away with it. He will bring that same focus to the SEC to ensure our markets are fair and transparent," Mr. Brown added.
The Senate committee is expected to approve Mr. Gensler's nomination later this month.