Gensler discusses SEC agenda, climate disclosure proposal at ICI summit

The Securities and Exchange Commission has been busy issuing rule proposals in recent months because the U.S. has the best capital markets and work is needed to maintain that distinction, SEC Chairman Gary Gensler said Thursday at the Investment Company Institute Leadership Summit in Washington.

Eric J. Pan, president and CEO of ICI, asked Mr. Gensler, who addressed the in-person conference virtually, what's driving the SEC's urgency. Since November, the SEC has proposed 25 rules, including two Wednesday, in a pace that has concerned some stakeholders.

Other nations boast strong capital markets and are aiming to surpass the U.S., Mr. Gensler said. "I wouldn't want to take anything for granted so I look at whatever time I have with God, the president and the electorate give me in this job … as time to help promote our three-part mission: investors on one side, issuers on the other and the markets in the middle."

The bulk of the interview led by Mr. Pan focused on climate and environmental, social and governance-related topics at the SEC.

Notably, the SEC in March issued a proposal that would require public companies to disclose a host of climate-related information in their registration statements and periodic reports. Earlier this month, the SEC extended the proposal's comment period to June 17 from May 20.

Mr. Pan asked how the SEC considers the proposal's likely costs to public companies in its decision-making process. An economic analysis is conducted for each proposal and over the decades, the SEC has "brought greater efficiency in capital markets by helping make sure there are consistent, comparable disclosures," Mr. Gensler responded. The climate disclosure proposal and a public company cybersecurity disclosure proposal unveiled in March are a continuation of that legacy, he added.

The two proposals approved Wednesday — one that would require investment advisers and fund managers to disclose additional information on ESG strategies in fund prospectuses, annual reports and adviser brochures; and another to expand the "Names Rule" under the Investment Company Act of 1940 to apply to any fund name with terms such as "growth" or "value" and those indicating that the fund's investment decisions incorporate one or more ESG factors — are aimed at providing more transparency for investors, Mr. Gensler added.

Mr. Gensler said he talks to his regulatory counterparts in Europe, Asia and Australia about consistency for market participants when it comes to climate-related regulations, but he added that the U.S. has to have its own say.

"We oversee 38% of the world's capital markets, if we don't weigh in, our issuers are probably going to have to comply, at least the larger ones, with other jurisdictions' frameworks and so we're better off as a nation … having a set of rules, again for some geopolitical reasons, rather than having our largest having to comply with somebody else's rules," Mr. Gensler said.